Larkspur, Inc. had outstanding $5,540,000 of 11% bonds (interest payable July 31 and January 31) due in 10 years. On July 1, it issued $8,870,000 of 10%, 15-year bonds (interest payable July 1 and January 1) at 99. A portion of the proceeds was used to call the 11% bonds (with unamortized discount of $55,400) at 101 on August 1. Prepare the journal entries necessary to record issue of the new bonds and the refunding of the bonds.

Larkspur, Inc. had outstanding $5,540,000 of 11% bonds (interest payable July 31 and January 31) due in 10 years. On July 1, it issued $8,870,000 of 10%, 15-year bonds (interest payable July 1 and January 1) at 99. A portion of the proceeds was used to call the 11% bonds (with unamortized discount of $55,400) at 101 on August 1. Prepare the journal entries necessary to record issue of the new bonds and the refunding of the bonds.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 6EB: Waldron Inc. issued $400,000 bonds with a stated rate of 7% when the market rate was 5%. They are...

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