On June 30, 2017. Cheyenne Company issued 12% bonds with a par value of $720,000 due in 20 years. They were issued at 97 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 issue on June 30, 2026, and to issue new bonds. New 10% bonds were sold in the amount of $940,000 at 102; they mature in 20 years. Cheyenne Company uses straight-line amortization. Interest payment dates are December 31 and June 30. (a) Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2026. (b) 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.

On June 30, 2017. Cheyenne Company issued 12% bonds with a par value of $720,000 due in 20 years. They were issued at 97 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 issue on June 30, 2026, and to issue new bonds. New 10% bonds were sold in the amount of $940,000 at 102; they mature in 20 years. Cheyenne Company uses straight-line amortization. Interest payment dates are December 31 and June 30. (a) Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2026. (b) 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.

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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