Required Scenario 1: 1. Prepare the journal entry assuming the bonds are issued at 103.5 on May 1, 2016. 2. Prepare the journal entry for interest and amortization on October 31, 2016. 3. Prepare the journal entry for the retirement of the bonds after 10 years on May 1, 2026. Scenario 2: 1. Prepare the journal entry assuming the bonds are issued at 96.5 on May 1, 2016. 2. Prepare the journal entry for interest and amortization on October 31, 2016. 3. Prepare the journal entry for the retirement of the bonds at maturity on May 1, 2041.
Monica Corporation has $4,000,000 of 8 percent, 25-year bonds dated May 1, 2016, with interest payable on April 30 and October 31. The company uses the straight-line method to amortize the bond premiums or discounts. The bonds are callable after 10 years at 103.
Required
Scenario 1:
1. Prepare the
2. Prepare the journal entry for interest and amortization on October 31, 2016.
3. Prepare the journal entry for the retirement of the bonds after 10 years on May 1, 2026.
Scenario 2:
1. Prepare the journal entry assuming the bonds are issued at 96.5 on May 1, 2016.
2. Prepare the journal entry for interest and amortization on October 31, 2016.
3. Prepare the journal entry for the retirement of the bonds at maturity on May 1, 2041.
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