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On June 30, 2013, Riverbed Limited issued 11.75% bonds witha par value of $761,000 due in 20 years. They were issued at 98 and were callable at 104 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, 2020, and to issue new bonds. New 10% bonds were sold in the amount of $1 million at 102; they mature in 20 years. The company follows ASPE and uses straight-line amortization. The interest payment dates are December 31 and June 30 of each year. Prepare journal entries to record the retirement of the old issue and the sale of the new issue on June 30, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manuolly. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)

On June 30, 2013, Riverbed Limited issued 11.75% bonds witha par value of $761,000 due in 20 years. They were issued at 98 and were callable at 104 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, 2020, and to issue new bonds. New 10% bonds were sold in the amount of $1 million at 102; they mature in 20 years. The company follows ASPE and uses straight-line amortization. The interest payment dates are December 31 and June 30 of each year. Prepare journal entries to record the retirement of the old issue and the sale of the new issue on June 30, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manuolly. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)

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 June 30, 2013, Riverbed Limited issued 11.75% bonds with a par value of $761,000 due in 20 years. They were issued at 98 and were callable at 104 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, 2020, and to issue new bonds. New 10% bonds were sold in the amount of $1 million at 102; they mature in 20 years. The company follows ASPE and uses straight-line amortization. The interest payment dates are December 31 and June 30 of each year. Prepare journal entries to record the retirement of the old issue and the sale of the new issue on June 30, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manuolly. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit June 30, Cash 745780 2020 Interest Expense 15220 Bonds Payable 761.000 (To record redemption of bonds payable) June 30, Cash 791440 2020 June 30, Cash 791440 2020 Bonds Payable 791440 (To record issuance of new bonds)
Transcribed Image Text:On June 30, 2013, Riverbed Limited issued 11.75% bonds with a par value of $761,000 due in 20 years. They were issued at 98 and were callable at 104 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, 2020, and to issue new bonds. New 10% bonds were sold in the amount of $1 million at 102; they mature in 20 years. The company follows ASPE and uses straight-line amortization. The interest payment dates are December 31 and June 30 of each year. Prepare journal entries to record the retirement of the old issue and the sale of the new issue on June 30, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manuolly. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit June 30, Cash 745780 2020 Interest Expense 15220 Bonds Payable 761.000 (To record redemption of bonds payable) June 30, Cash 791440 2020 June 30, Cash 791440 2020 Bonds Payable 791440 (To record issuance of new bonds)
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