On 12/31/2018 Frateschi Model Trains, Inc. (CHOO) issued an 8.5% bond, with nominal value of $300,000, due on 12/31/2023, interest was to be paid semi-annually starting on 7/1/2019. Total proceeds from this bond were $297,014.41. CHOO redeemed these bonds on June 30, 2022, when the YTM was 9.0%. Compute the fair value of CHOO's bonds on that date and prepare an entry to redeem the bonds entirely on June 30, 2022, at the fair value.

On 12/31/2018 Frateschi Model Trains, Inc. (CHOO) issued an 8.5% bond, with nominal value of $300,000, due on 12/31/2023, interest was to be paid semi-annually starting on 7/1/2019. Total proceeds from this bond were $297,014.41. CHOO redeemed these bonds on June 30, 2022, when the YTM was 9.0%. Compute the fair value of CHOO's bonds on that date and prepare an entry to redeem the bonds entirely on June 30, 2022, at the fair value.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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