On September 30, 2012, Pharoah Company issued 10% bonds with a par value of $480,000 due in 20 years. They were issued at 98 and were callable at 103 at any date after September 30, 2017. Because Pharoah Company was able to obtain financing at lower rates, it decided to call the entire issue on September 30, 2018, and to issue new bonds. New 8% bonds were sold in the amount of $790,000 at 104; they mature in 20 years. Pharoah Company uses straight-line amortization. Interest payment dates are March 31 and September 30. Prepare journal entries to record the redemption of the old issue and the sale of the new issue on September 30, 2018 Prepare the entry required on December 31, 2018, to accrue interest and amortize the premium on the bonds.
On September 30, 2012, Pharoah Company issued 10% bonds with a par value of $480,000 due in 20 years. They were issued at 98 and were callable at 103 at any date after September 30, 2017. Because Pharoah Company was able to obtain financing at lower rates, it decided to call the entire issue on September 30, 2018, and to issue new bonds. New 8% bonds were sold in the amount of $790,000 at 104; they mature in 20 years. Pharoah Company uses straight-line amortization. Interest payment dates are March 31 and September 30. Prepare journal entries to record the redemption of the old issue and the sale of the new issue on September 30, 2018 Prepare the entry required on December 31, 2018, to accrue interest and amortize the premium on the bonds.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 16E
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On September 30, 2012, Pharoah Company issued 10% bonds with a par value of $480,000 due in 20 years. They were issued at 98 and were callable at 103 at any date after September 30, 2017. Because Pharoah Company was able to obtain financing at lower rates, it decided to call the entire issue on September 30, 2018, and to issue new bonds. New 8% bonds were sold in the amount of $790,000 at 104; they mature in 20 years. Pharoah Company uses straight-line amortization. Interest payment dates are March 31 and September 30.
Prepare journal entries to record the redemption of the old issue and the sale of the new issue on September 30, 2018
Prepare the entry required on December 31, 2018, to accrue interest and amortize the premium on the bonds.
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