vr Marin Inc. had outstanding $8,000,000 of 8.25% bonds (interest payable March 31 and September 30) due in 12 years. Marin was ableto reduce its risk rating through investing in more real estate. As a result, on September 1, it issued $3,000,000 of 10-year, 6% bonds(interest payable July 1 and January 1) at 100. The proceeds plus additional cash was used to call the 8.25% bonds at 105 on October1. The unamortized bond discount for the 8.25% bonds was $979,000 on October 1. Marin prepares financial statements inaccordance with IFRS.Prepare the necessary journal entries to record the issue of the new bonds and the retirement of the old bonds. (Credit account titles areautomatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles andenter O for the amounts. List all debit entries before credit entries.)Account Titles and ExplanationDebitCreditCashBonds Payable(To record issuance of 6% bonds)Bonds PayableLoss on Redemption of BondsCash(To record retirement of 8.25% bonds)300000010832000300000078320003000000

Step 1. Issuance of the new bonds on September 1:Marin issued $3,000,000 of 10-year, 6% bonds at…

Answered: Marin Inc. had outstanding $8,000,000…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter20: Financing With Derivatives

Section: Chapter Questions

Problem 16P

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On January 1 of this year, Clearwater Corporation sold bonds with a face value of $780,000 and a coupon rate of 9 percent. The bonds mature in 10 years and pay interest annually every December 31. Clearwater uses the straight-line amortization method and does not use a discount account. Assume an annual market rate of interest of 10 percent. (EY of $1. PV of $1. EVA of $1. and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Required: 1.82. Prepare the journal entry to record the issuance of the bonds and the interest payment on December 31 of this year. 3. What bonds payable amount will Clearwater report on its December 31 balance sheet? Complete this question by entering your answers in the tabs below. Required 1 and 2 Required 3 Prepare the journal entry to record the issuance of the bonds and the interest payment on December 31 of this year. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.…
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