The following is an excerpt taken from the December 31, 2011, balance sheet of the Wimbledon Company: The bonds have
The bonds have a stated interest rate of 8% and mature on January 1, 2017. Interest is paid semiannually on July 1 and January 1. The bonds are callable at 105 on any semiannual interest date.
a. Prepare the journal entry to record the payment of bond interest on January 1, 2012.
b. Prepare the journal entry to amortize the bond discount and pay the interest on July 1, 2012.
c. Prepare the journal entry to record the redemption of the bonds on July 1, 2012, after the interest has been paid.
d. Prepare the adjusting journal entry for December 31, 2012, assuming that the bonds were not redeemed.
e. Show how all liabilities related to the bonds would be reported on Wimbledon's balance sheet at December 31, 2012.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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