On January 1, 2015, ABC Co. issued ten-year bonds with a face value of $1,000,000 and astated interest rate of 10%, payable annually on January 1. The bonds were sold to yield12%. The issue price of the bonds was $886,996On October 31, 2017, the company decided to extinguish 55% of the bonds by making acash payment of $520,000. The cash payment includes any accrued interest by the dateof 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

No necessary journal entries made on September 30, 2016 Because no transaction were made on the same…

Answered: Required: For ABC Co: Prepare the…

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

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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Question

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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