On January 1, 2015, ABC Co, issued ten - year bonds with a face value of $ 1,000,000 and a stated interest rate of 10%, payable semiannually on July 1 and January 1. The bonds were sold to yield 12%. The issue price of the bonds was $ 885,500. On September 30, 2016, the company decided to extinguish 65% of the bonds by making a cash payment of $ 600,000. The reacquisition cash payment includes any accrued interest by the date of extinguishment. The company uses the effective interest method of amortization. SHARE Required: For ABC Co: Prepare the necessary journal entry (ies) on September 30, 2016.
On January 1, 2015, ABC Co, issued ten - year bonds with a face value of $ 1,000,000 and a stated interest rate of 10%, payable semiannually on July 1 and January 1. The bonds were sold to yield 12%. The issue price of the bonds was $ 885,500. On September 30, 2016, the company decided to extinguish 65% of the bonds by making a cash payment of $ 600,000. The reacquisition cash payment includes any accrued interest by the date of extinguishment. The company uses the effective interest method of amortization. SHARE Required: For ABC Co: Prepare the necessary journal entry (ies) on September 30, 2016.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2015, ABC Co, issued ten - year bonds with a face value of $ 1,000,000 and a stated interest rate of 10%, payable semiannually on July 1 and January 1. The bonds were sold to yield 12%. The issue price of the bonds was $ 885,500. On September 30, 2016, the company decided to extinguish 65% of the bonds by making a cash payment of $ 600,000. The reacquisition cash payment includes any accrued interest by the date of extinguishment. The company uses the effective interest method of amortization. SHARE Required: For ABC Co: Prepare the necessary
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