Three years ago on January 1, 2022, American Insulation Company issued 10%, $800,000, 10-year bonds for $770,000. Debt transaction costs were $3,000. American Insulation exercised its call privilege on December, 31, 2024, and retired the bonds for $790,000. Interest was paid semiannually. Debt transaction costs were amortized over the tenure of the bonds using the effective interest method. The effective interest rate per semiannual period was 5.34%. Required: 1. Prepare the journal entry to record the issue of the bonds. 2. Prepare the bond amortization table from the date of issue to the date of the call of the bonds. 3. Prepare the journal entry to record the call of the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Three years ago on January 1, 2022, American Insulation Company issued 10%, $800,000, 10-year bonds for $770,000. Debt transaction costs were $3,000. American Insulation exercised its call privilege on December, 31, 2024, and retired the bonds for $790,000. Interest was paid semiannually. Debt transaction costs were amortized over the tenure of the bonds using the effective interest method. The effective interest rate per semiannual period was 5.34%. Required: 1. Prepare the journal entry to record the issue of the bonds. 2. Prepare the bond amortization table from the date of issue to the date of the call of the bonds. 3. Prepare the journal entry to record the call of the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 5PA: Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July...

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