On June 30, 2016. Cheyenne Limited issued 12.75% bonds with a par value of $790,000 due in 20 years. They were issued at 97 and were callable at 106 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 101; 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, 2023. (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 0 for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation June 30, 2023 June 30, 2023 Bonds Payable Loss on Redemption of Bonds Cash (To record redemption of bonds payable) (To record issuance of new bonds) eTextbook and Media List of Accounts Date Account Titles and Explanation Dec. 31, 2023 Interest Expense Debit Cash 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.) 790000 Debit 55695 Credit Credit
On June 30, 2016. Cheyenne Limited issued 12.75% bonds with a par value of $790,000 due in 20 years. They were issued at 97 and were callable at 106 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 101; 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, 2023. (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 0 for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation June 30, 2023 June 30, 2023 Bonds Payable Loss on Redemption of Bonds Cash (To record redemption of bonds payable) (To record issuance of new bonds) eTextbook and Media List of Accounts Date Account Titles and Explanation Dec. 31, 2023 Interest Expense Debit Cash 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.) 790000 Debit 55695 Credit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On June 30, 2016. Cheyenne Limited issued 12.75% bonds with a par value of $790,000 due in 20 years. They were issued at 97 and
were callable at 106 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 101; 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, 2023. (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.)
Date Account Titles and Explanation
June
30,
2023
June
30,
2023
Bonds Payable
Loss on Redemption of Bonds
Cash
(To record redemption of bonds payable)
Dec.
31,
2023
(To record issuance of new bonds)
eTextbook and Media
List of Accounts
Date Account Titles and Explanation
Interest Expense
Debit
Cash
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.)
790000
Debit
55695
Credit
NO
Credit
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