On October 31, 2015, Lago Inc. issued $15 million of 30-year, 6% bonds payable. The bonds...

  

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On October 31, 2015, Lago Inc. issued $15 million of 30-year, 6% bonds payable. The bonds pay interest on each April 30 and October 31 and mature on October 31, 2045. Each $1,000 bond can be called in and cancelled at a call premium of 103. Issuance costs of $100,000 were retained by the underwriter as payment upon issuance of the bonds on October 31, 2015. The annual yield on the bond reflected the annual market rate of 5% Lago Inc. expenses the underwriting fees and uses the effective interest method to amortize premiums and discounts. The year end is December 31. On April 30, 2022, one-quarter of the bonds outstanding were called and cancelled. Required: a. Given all the information above, what is the net proceeds on the bond (round answer to nearest dollar). b. Prepare the journal entry(ies) to record the issuance of the bonds on October 31, 2015. c. Prepare the December 31, 2017 year-end adjusting journal entries. d. Prepare the journal entry or entries to account for the call and cancellation of the bonds on April 30, 2022. Assume the interest related journal entries were properly recorded prior to the actual call and cancellation. e. Prepare the journal entry related to the bond on October 31, 2028. On October 31, 2015, Lago Inc. issued $15 million of 30-year, 6% bonds payable. The bonds pay interest on each April 30 and October 31 and mature on October 31, 2045. Each $1,000 bond can be called in and cancelled at a call premium of 103. Issuance costs of $100,000 were retained by the underwriter as payment upon issuance of the bonds on October 31, 2015. The annual yield on the bond reflected the annual market rate of 5% Lago Inc. expenses the underwriting fees and uses the effective interest method to amortize premiums and discounts. The year end is December 31. On April 30, 2022, one-quarter of the bonds outstanding were called and cancelled. Required: a. Given all the information above, what is the net proceeds on the bond (round answer to nearest dollar). b. Prepare the journal entry(ies) to record the issuance of the bonds on October 31, 2015. c. Prepare the December 31, 2017 year-end adjusting journal entries. d. Prepare the journal entry or entries to account for the call and cancellation of the bonds on April 30, 2022. Assume the interest related journal entries were properly recorded prior to the actual call and cancellation. e. Prepare the journal entry related to the bond on October 31, 2028.

Answer rating: 100% (QA)

Answer a Given all the information above what is the net proceeds on the band The net proceeds on th... View the full answer