. On December 1, 20x1, AVS Company issued 10% bonds with a face amount of $20 million. The bonds mature in 5 years. For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on May 31 and November 30. AVS is a calendar-year corporation. 4. Prepare the journal entry (using the effective interest method) on December 31, 20x1 (adjusting entry, no cash payment) 5. Prepare the journal entries (using the effective interest method) on May 31, 20x2 (1st payment). 6. What would be the journal entry if all bonds are retired at 103 on June 1, 20x3 right after the third payment.

. On December 1, 20x1, AVS Company issued 10% bonds with a face amount of $20 million. The bonds mature in 5 years. For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on May 31 and November 30. AVS is a calendar-year corporation. 4. Prepare the journal entry (using the effective interest method) on December 31, 20x1 (adjusting entry, no cash payment) 5. Prepare the journal entries (using the effective interest method) on May 31, 20x2 (1st payment). 6. What would be the journal entry if all bonds are retired at 103 on June 1, 20x3 right after the third payment.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 14MC: Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the...

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