On January 1, 2015, ABC Co. issued ten-year bonds with a face value of $1,000,000 and a stated interest rate of 10%, payable semiannually on July 1 and January 1. The bonds were sold to yield 12%. The issue price of the bonds was $885,500. On September 30, 2016, the company decided to extinguish 65% of the bonds by making a cash payment of $600,000. The reacquisition cash payment includes any accrued interest by the date of extinguishment. The company uses the effective-interest method of amortization. Required: For ABC Co: Prepare the necessary journal entry(ies) on September 30, 2016. SHARE

On January 1, 2015, ABC Co. issued ten-year bonds with a face value of $1,000,000 and a stated interest rate of 10%, payable semiannually on July 1 and January 1. The bonds were sold to yield 12%. The issue price of the bonds was $885,500. On September 30, 2016, the company decided to extinguish 65% of the bonds by making a cash payment of $600,000. The reacquisition cash payment includes any accrued interest by the date of extinguishment. The company uses the effective-interest method of amortization. Required: For ABC Co: Prepare the necessary journal entry(ies) on September 30, 2016. SHARE

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 4EA: On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated...

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On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
Diana Inc. issued $100,000 of its 9%, 5-year bonds for $96,149 when the market rate was 10%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments.
On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The bonds paid interest semi-annually. Assuming the bonds sold at 58.55, what was the selling price of the bonds? Explain why the cash received from selling this bond is different from the $200,000 face value of the bond.
Naval Inc. issued $200,000 face value bonds at a discount and received $190,000. At the end of 2018, the balance in the Discount on Bonds Payable account is $5,000. This years balance sheet will show a net liability of ________. A. $200,000 B. $180,000 C. $195,000 D. $205,000
On July 1, a company sells 8-year $250,000 bonds with a stated interest rate of 6%. If interest payments are paid annually, each interest payment will be ________. A. $120,000 B. $60,000 C. $7,500 D. $15,000