On January 1, 2021, ABC Company issued a $500,000, 8%, 10-year bond at the yield of 6%. Interest is to be paid semi-annually on July 1 and December 31 each year. Assume a Dec 31, year end. On March 1, 2022 ABC Company decides to retire 20% of the bonds at 101 plus accrued interest. Assume that interest is paid when making the bond retirement entry. a. Make the entry at this date to update interest expense and interest payable. b. Calculate any unamortized premium or discount to be recorded at bond retirement date. c. Record the bond retirement and book any gain or loss on the retirement.

On January 1, 2021, ABC Company issued a $500,000, 8%, 10-year bond at the yield of 6%. Interest is to be paid semi-annually on July 1 and December 31 each year. Assume a Dec 31, year end. On March 1, 2022 ABC Company decides to retire 20% of the bonds at 101 plus accrued interest. Assume that interest is paid when making the bond retirement entry. a. Make the entry at this date to update interest expense and interest payable. b. Calculate any unamortized premium or discount to be recorded at bond retirement date. c. Record the bond retirement and book any gain or loss on the retirement.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 16E

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