. 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.
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 6PA: Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1,...
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II. 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
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.
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