The owner of a taxi business(“Speedy”)has been having difficulties in accounting for the company’s liabilities and equity, and have asked for your assistance (ignore GST).

Required:

BONDS: Several years ago, Speedy had issued $200,000 face value bonds at 104. The bonds had a contract interest rate of 8%, paid interest semi-annually on 1st February and1st August, and were issued to yield 6%. On 1 February 2020, after interest was paid, Speedy redeemed all of the bonds. On that date, the carrying value of the bonds was$202,600 and there were five years remaining until the maturity. The market interest rate on the redemption date was 10%.

 Reproduce the general journal entry that recorded the redemption of the bonds. The
the journal entry that recorded the interest payment is not required.
o n = 10; i = 4% (discount factor = 0.676; annuity factor = 8.111)
o n = 10; i = 5% (discount factor = 0.614; annuity factor = 7.722)

Answer rating: 100% (QA)

Journal Entries to record Redemption of Bonds in Speedy Inc To record the issuance of the bonds ... View the full answer