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On January 1, 2011, Davis Corporation issued $3,900,000 of 7% bonds at 101. Interest is paid annually on December 31 of each year. The bonds mature on December 31, 2027, and the company uses the straight-line method of amortization. On January 2, 2019, Davis reacquired the bonds and recognized a loss of $88,000. 1. Calculate the reacquisition price of the bonds on January 2, 2019.   2. Prepare the journal entry to record the reacquisition of Davis’s bonds on January 2, 2019. (I started some of it below)     DATE ACCOUNT TITLE   DEBIT CREDIT 1 Jan 2 Bonds Payable   3,900,000   2   Premium on Bonds Payable       3   Loss on Bond Reacquisition   88,000   4   Cash

On January 1, 2011, Davis Corporation issued $3,900,000 of 7% bonds at 101. Interest is paid annually on December 31 of each year. The bonds mature on December 31, 2027, and the company uses the straight-line method of amortization. On January 2, 2019, Davis reacquired the bonds and recognized a loss of $88,000. 1. Calculate the reacquisition price of the bonds on January 2, 2019.   2. Prepare the journal entry to record the reacquisition of Davis’s bonds on January 2, 2019. (I started some of it below)     DATE ACCOUNT TITLE   DEBIT CREDIT 1 Jan 2 Bonds Payable   3,900,000   2   Premium on Bonds Payable       3   Loss on Bond Reacquisition   88,000   4   Cash

FINANCIAL ACCOUNTING
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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On January 1, 2011, Davis Corporation issued $3,900,000 of 7% bonds at 101. Interest is paid annually on December 31 of each year. The bonds mature on December 31, 2027, and the company uses the straight-line method of amortization. On January 2, 2019, Davis reacquired the bonds and recognized a loss of $88,000.

1. Calculate the reacquisition price of the bonds on January 2, 2019.
 
2. Prepare the journal entry to record the reacquisition of Davis’s bonds on January 2, 2019. (I started some of it below)
 
  DATE ACCOUNT TITLE   DEBIT CREDIT
1
Jan 2
 Bonds Payable
 
3,900,000
 
2
 
Premium on Bonds Payable
 
 
 
3
 
Loss on Bond Reacquisition
 
88,000
 
4
 
Cash
 
 
 
 
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