On June 30, 2012, Marigold Company issued 12% bonds with a par value of $840,000 due in 20 years. They were issued at 98 and were callable at 103 at any date after June 30, 2020. Because of lower interest rates and a significant change in the company’s credit rating, it was decided to call the entire issue on June 30, 2021, and to issue new bonds. New 8% bonds were sold in the amount of $1,060,000 at 103; they mature in 20 years. Marigold Company uses straight-line amortization. Interest payment dates are December 31 and June 30. (a) Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2021. (b) Prepare the entry required on December 31, 2021, to record the payment of the first 6 months’ interest and the amortization of premium on the bonds.
On June 30, 2012, Marigold Company issued 12% bonds with a par value of $840,000 due in 20 years. They were issued at 98 and were callable at 103 at any date after June 30, 2020. Because of lower interest rates and a significant change in the company’s credit rating, it was decided to call the entire issue on June 30, 2021, and to issue new bonds. New 8% bonds were sold in the amount of $1,060,000 at 103; they mature in 20 years. Marigold Company uses straight-line amortization. Interest payment dates are December 31 and June 30.
| (a) | Prepare |
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| (b) | Prepare the entry required on December 31, 2021, to record the payment of the first 6 months’ interest and the amortization of premium on the bonds. |
To begin, keeping accurate records of your transactions helps to organize the data in your business. Accountants meticulously record data in a specific order and format. This allows them to quickly retrieve information while also keeping an eye out for any potential accounting issues. Second, diary entries are the first stage of recording. As a result, you'll need them to prepare more financial statements in the future. The income statement, cash flow statement, and balance sheet all require the first journal entries. Adjusting entries, closing entries, and regular entries are examples of diary entries.
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