On June 30, 2017, Oriole Corp. issued 10% bonds with a face value of $800,000 due in 20 years. They were issued at 98 and were callable at 104 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 issuance on June 30, 2026, after interest has been paid and to issue new bonds. New 10% bonds with a face value of $1,040,000 were sold at 102; they mature in 20 years. Oriole Corp. uses straight-line amortization. Interest payment dates are December 31 and June 30. (a) (b) (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.) No. (a) Prepare journal entries to record the retirement of the old issuance and the sale of the new issuance 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. (b) Date Account Titles and Explanation (To record the redemption of the old issue) (To record the sale of the new issue) Debit Credit

On June 30, 2017, Oriole Corp. issued 10% bonds with a face value of $800,000 due in 20 years. They were issued at 98 and were callable at 104 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 issuance on June 30, 2026, after interest has been paid and to issue new bonds. New 10% bonds with a face value of $1,040,000 were sold at 102; they mature in 20 years. Oriole Corp. uses straight-line amortization. Interest payment dates are December 31 and June 30. (a) (b) (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.) No. (a) Prepare journal entries to record the retirement of the old issuance and the sale of the new issuance 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. (b) Date Account Titles and Explanation (To record the redemption of the old issue) (To record the sale of the new issue) Debit Credit

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 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…
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 annually on January 1. The bonds were sold to yield 12%. The issue price of the bonds was $886,996 On October 31, 2017, the company decided to extinguish 55% of the bonds by making a cash payment of $520,000. The 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. SHARE
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