Homework Help is Here – Start Your Trial Now!
Business
Accounting
5. On January 1, 2011, Ouachita Airlines issued $400,000 of its 20-year, 8% bonds. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Ouachita Airlines records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2011, the fair value of the bonds was $335,000 as determined by their fair value in the over-the-counter market. Required: a) Determine the price of the bonds at January 1, 2011, and prepare the journal entry to record their issuance Show calculations. b). Prepare the journal entry to record interest on June 30, 2011 (the first interest payment). Show calculations.c). Prepare the journal entry to record interest on December 31, 2011 (the second interest payment). Show calculations.

5. On January 1, 2011, Ouachita Airlines issued $400,000 of its 20-year, 8% bonds. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Ouachita Airlines records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2011, the fair value of the bonds was $335,000 as determined by their fair value in the over-the-counter market. Required: a) Determine the price of the bonds at January 1, 2011, and prepare the journal entry to record their issuance Show calculations. b). Prepare the journal entry to record interest on June 30, 2011 (the first interest payment). Show calculations.c). Prepare the journal entry to record interest on December 31, 2011 (the second interest payment). Show calculations.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Do not give answer in image 

5. On January 1, 2011, Ouachita Airlines issued $400,000 of its 20-year, 8% bonds. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Ouachita Airlines records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2011, the fair value of the bonds was $335,000 as determined by their fair value in the over-the-counter market. Required: a). Determine the price of the bonds at January 1, 2011, and prepare the journal entry to record their issuance Show calculations. b). Prepare the journal entry to record interest on June 30, 2011 (the first interest payment). Show calculations. c). Prepare the journal entry to record interest on December 31, 2011 (the second interest payment). Show calculations.
Transcribed Image Text:5. On January 1, 2011, Ouachita Airlines issued $400,000 of its 20-year, 8% bonds. The bonds were priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Ouachita Airlines records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2011, the fair value of the bonds was $335,000 as determined by their fair value in the over-the-counter market. Required: a). Determine the price of the bonds at January 1, 2011, and prepare the journal entry to record their issuance Show calculations. b). Prepare the journal entry to record interest on June 30, 2011 (the first interest payment). Show calculations. c). Prepare the journal entry to record interest on December 31, 2011 (the second interest payment). Show calculations.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Derivatives and Hedge Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS