On January 1, 2019, Naomi, Inc. issued $2,000,000, 4% bonds when the market rate was 6%. Interest is payable semiannually on June 30 and December 31 with the bonds maturing on December 31, 2028 (10 years). The bonds are callable at 102. On January 1, 2024, Naomi retired $1,000,000 of the bonds at the call price. At the time they retired the bonds, they also paid the accrued interest for those bonds retired. Required: a. Prepare the journal entry to record the issuance of the bonds. b. Naomi uses the effective interest method to amortize any discount or premium. Prepare an amortization schedule for the bonds c. Prepare any required journal entries for interest payments for the first year-2019. d. Prepare all required entries to record the retirement of the bonds on January 1, 2024. Show formulas /equations
On January 1, 2019, Naomi, Inc. issued $2,000,000, 4% bonds when the market rate was 6%. Interest is payable semiannually on June 30 and December 31 with the bonds maturing on December 31, 2028 (10 years). The bonds are callable at 102. On January 1, 2024, Naomi retired $1,000,000 of the bonds at the call price. At the time they retired the bonds, they also paid the accrued interest for those bonds retired. Required: a. Prepare the journal entry to record the issuance of the bonds. b. Naomi uses the effective interest method to amortize any discount or premium. Prepare an amortization schedule for the bonds c. Prepare any required journal entries for interest payments for the first year-2019. d. Prepare all required entries to record the retirement of the bonds on January 1, 2024. Show formulas /equations
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2019, Naomi, Inc. issued $2,000,000, 4% bonds when the market rate was 6%. Interest is payable semiannually on June 30 and December 31 with the bonds maturing on
December 31, 2028 (10 years). The bonds are callable at 102. On January 1, 2024, Naomi retired $1,000,000 of the bonds at the call price. At the time they retired the bonds, they also paid the
accrued interest for those bonds retired. Required: a. Prepare the journal entry to record the issuance of the bonds. b. Naomi uses the effective interest method to amortize any discount
premium. Prepare an amortization schedule for the bonds c. Prepare any required journal entries for interest payments for the first year - 2019. d. Prepare all required entries to record the
retirement of the bonds on January 1, 2024. Show formulas /equations
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