On June 30, 2017, Bramble Company issued 12% bonds with a par value of $760,000 due in 20 years. They were issued at 98 and were callable at 105 at any date after June 30, 2025. 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, 2026, and to issue new bonds. New 8% bonds were sold in the amount of $920,000 at 103; they mature in 20 years. Bramble Company uses straight-line amortization. Interest payment dates are December 31 and June 30. (a) (b) Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2026. Prepare the entry required on December 31, 2026, to record the payment of the first 6 months' interest and the amortization of premium on the bonds. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.)

On June 30, 2017, Bramble Company issued 12% bonds with a par value of $760,000 due in 20 years. They were issued at 98 and were callable at 105 at any date after June 30, 2025. 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, 2026, and to issue new bonds. New 8% bonds were sold in the amount of $920,000 at 103; they mature in 20 years. Bramble Company uses straight-line amortization. Interest payment dates are December 31 and June 30. (a) (b) Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2026. Prepare the entry required on December 31, 2026, to record the payment of the first 6 months' interest and the amortization of premium on the bonds. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. 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

See similar textbooks

Similar questions

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. SHARE Required: For ABC Co: Prepare the necessary journal entry (ies) on September 30, 2016.
On January 1, 2021, Tiny Tim Industries had outstanding $1,000,000 of 9% bonds with a book value of $965,500. The indenture specified a call price of $982,000. The bonds were issued previously at a price to yield 11% and interest payable semi-annually on July 1 and January 1. Tiny Tim called the bonds (retired them) on July 1, 2021. What is the amount of the loss on early extinguishment?
On September 30, 2012, Pharoah Company issued 10% bonds with a par value of $480,000 due in 20 years. They were issued at 98 and were callable at 103 at any date after September 30, 2017. Because Pharoah Company was able to obtain financing at lower rates, it decided to call the entire issue on September 30, 2018, and to issue new bonds. New 8% bonds were sold in the amount of $790,000 at 104; they mature in 20 years. Pharoah Company uses straight-line amortization. Interest payment dates are March 31 and September 30. Prepare journal entries to record the redemption of the old issue and the sale of the new issue on September 30, 2018 Prepare the entry required on December 31, 2018, to accrue interest and amortize the premium on the bonds.
On January 2, 2015, Blossom Corporation issued $1,600,000 of 10% bonds at 99 due December 31, 2024. Interest on the bonds is payable annually each December 31. The discount on the bonds is also being amortized on a straight-line basis over the 10 years. (Straight-line is not materially different in effect from the preferable "interest method.") The bonds are callable at 102 (i.e., at 102% of face amount), and on January 2, 2020, Blossom called $960,000 face amount of the bonds and redeemed them. Ignoring income taxes, compute the amount of loss, if any, to be recognized by Blossom as a result of retiring the $960,000 of bonds in 2020. (Round answer to 0 decimal places, e.g. 38,548.) Loss on redemption $ Prepare the journal entry to record the redemption. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent…
Please help me
On June 30, 2012, County Company issued 12% bonds with a par value of $800,000 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, 2021, and to issue new bonds. New 10% bonds were sold in the amount of $1,000,000 at 102; they mature in 20 years. County Company uses straight-line amortization. Interest payment dates are December 31 and June 30. Instructions 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 September 30, 2012, Sheridan Company issued 10% bonds with a par value of $520,000 due in 20 years. They were issued at 98 and were callable at 105 at any date after September 30, 2017. Because Sheridan Company was able to obtain financing at lower rates, it decided to call the entire issue on September 30, 2018, and to issue new bonds, New 8% bonds were sold in the amount of $880,000 at 103; they mature in 20 years. Sheridan Company uses straight-line amortization. Interest payment dates are March 31 and September 30. Your answer is correct. Prepare journal entries to record the redemption of the old issue and the sale of the new issue on September 30, 2018. (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) Account Titles and Explanation Debit Credit F
Flint Company had bonds outstanding with a maturity value of $272,000. On April 30, 2025, when these bonds had an unamortized discount of $10,000, they were called in at 105. To pay for these bonds, Flint had issued other bonds a month earlier bearing a lower interest rate. The newly issued bonds had a life of 10 years. The new bonds were issued at 103 (face value $272,000). Ignoring interest, compute the gain or loss. Loss ✓on redemption $ Ignoring interest, prepare the two entries to record this refunding transaction. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.) Account Titles and Explanation Bonds Payable Loss on Redemption of Bonds Discount on Bonds Payable Cash (To record redemption of bonds payable) Cash Premium on Bonds Payable 23600 Bonds Payable Debit 272000 23600 Credit 10000…
On January 1, 2020, Bramble Corporation issued $5,130,000 of 10% bonds at 102 due December 31, 2029. Bramble paid $81,000 in bond issue costs when the bonds were issue to the market. These will be amortized over the life of the bond. The premium on the bonds is also being amortized on a straight-line basis over the 10 years. (Straight-line is not materially different in effect from the preferable "interest method".) The bonds are callable at 104 (i.e., at 104% of face amount), and on January 2, 2025, Bramble called one-half of the bonds and retired them. Ignoring income taxes, compute the amount of loss, if any, to be recognized by Bramble as a result of retiring the $2,565,000 of bonds in 2025. Loss on redemption Prepare the journal entry to record the retirement. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries…
(Entries for Redemption and Issuance of Bonds) Jason Day Company had bonds outstanding with a maturity value of $300,000. On April 30, 2017, when these bonds had an unamortized discount of $10,000, they were called in at 104. To pay for these bonds, Day had issued other bonds a month earlier bearing a lower interest rate. The newly issued bonds had a life of 10 years. The new bonds were issued at 103 (face value $300,000).InstructionsIgnoring interest, compute the gain or loss and record this refunding transaction.
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 manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts) Debit Credit Date Account Titles and Explanation June 30, 2020 (To record redemption of bonds payable) June 30, 2020…
On January 1, 2020, West-Tex Oil issued $50 million of 8% bonds maturing in 10 years. The market interest rate on the issue date was 9%, which resulted in the bonds being issued at a discount. In December 2021, Tex Winters, the company CFO, notes that in the two years since the bonds were issued, interest rates have fallen almost 3%. Tex suggests that West-Tex might consider repurchasing the 8% bonds and reissuing new bonds at the lower current interest rates. Another executive, Will Bright, asks, “Won’t the repurchase result in a large loss to our financial statements?” Tex agrees, indicating that West-Tex is likely to just meet earnings targets for 2021. The company would probably not meet its targets with a multimillion-dollar loss on a bond repurchase. However, 2022 looks to be a record-breaking year. They decide that maybe they should wait until 2022 to repurchase the bonds. How could the repurchase of debt cause a loss to be reported in net income? Explain how the repurchase of…