On 09-01-15, O issued $8,000,000 of its 6%, 5-year callable term bonds dated 09-30-15. The bonds pay interest every September 01 and March 01. O can call in the bonds any time after 09-01-18 at 101. At the time O issued the bonds, similar bonds paid 6%. Upon issuing the bonds, O incurred and paid $74,000 of bond issuance costs. O uses the effective-interest method to amortize any bond discount or premium. O prepares AJEs only as of every December 31. On July 01, 2019, G called in $6,000,000 of the bonds at the call price of 101 plus interest. Prepare the entries O should make on:09-01-1512-31-1503-01-1609-01-1607-01-1909-01-1912-31-1903-01-2009-01-20

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Asked Feb 4, 2020
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  1. On 09-01-15, O issued $8,000,000 of its 6%, 5-year callable term bonds dated 09-30-15. The bonds pay interest every September 01 and March 01. O can call in the bonds any time after 09-01-18 at 101. At the time O issued the bonds, similar bonds paid 6%. Upon issuing the bonds, O incurred and paid $74,000 of bond issuance costs. O uses the effective-interest method to amortize any bond discount or premium. O prepares AJEs only as of every December 31. On July 01, 2019, G called in $6,000,000 of the bonds at the call price of 101 plus interest. Prepare the entries O should make on:
    1. 09-01-15
    2. 12-31-15
    3. 03-01-16
    4. 09-01-16
    5. 07-01-19
    6. 09-01-19
    7. 12-31-19
    8. 03-01-20
    9. 09-01-20
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Expert Answer

Step 1

Bonds:

 

Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Step 2

Prepare the entries to be made by O:

 

Accounting homework question answer, step 2, image 1

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