Question: Question 3- 5 marks Gresham Ltd. issued $100,000 face value bonds on January 1, 20X7 which will mature on December 31, 20X11. Gresham has a

Question 3- 5 marks

Gresham Ltd. issued $100,000 face value bonds on January 1, 20X7 which will mature on December 31, 20X11. Gresham has a December 31 fiscal year end. The bonds have a coupon rate of 6% per annum, interest payable on January 1, and were priced to yield 4% at issue date. On April 1, 20X8, Gresham repurchased $20,000 face value of those bonds at 95 as it had idle funds and wished to improve their debt to equity ratio. Any accrued interest owing was paid at the time of repurchase.

Required:

Provide journal entries required by Gresham to record the issuance of the bonds, the entry required on December 31, 20X7 and on April 1, 20X8.

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