On June 30, 2016, Flint Limited issued 13.75% bonds with a par value of $802,000 due in 20 years. They were issued at 99 and were callable at 102 at any date after June 30, 2023. 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, 2023, and to issue new bonds. New 10% bonds were sold in the amount of $1 million at 104; 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 the entry required on December 31, 2023, to record the payment of the first six months of interest and the amortization of the bond premium. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)

On June 30, 2016, Flint Limited issued 13.75% bonds with a par value of $802,000 due in 20 years. They were issued at 99 and were callable at 102 at any date after June 30, 2023. 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, 2023, and to issue new bonds. New 10% bonds were sold in the amount of $1 million at 104; 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 the entry required on December 31, 2023, to record the payment of the first six months of interest and the amortization of the bond premium. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)

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 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. Required: For ABC Co: Prepare the necessary journal entry(ies) on September 30, 2016. OR SHARE
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