Answer:
A. OLD BOND REDEMPTION :
June 30, 2021
Dr 12% Bonds payable 770,000
Dr Loss on retirement of bonds 31,570
Cr Cash 793,100
Cr Discount on bonds 8,470
NEW BOND ISSUE:
June 30, 2021
Dr Cash 1,020,000
Cr 10% Bonds payable 1,000,000
Cr Premium on bonds 20,000
B. Dec 31, 2021
Dr Interest expense 49,500
Dr Premium on bonds payable 500
Cr Cash 50,000
Explanation:
a. Preparation of the journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2021.
OLD BOND REDEMPTION :
June 30, 2021
Dr 12% Bonds payable 770,000
Dr Loss on retirement of bonds 31,570
Cr Cash 793,100
(103*770,000)
Cr Discount on bonds 8,470
(To record redemption of old bonds)
NEW BOND ISSUE:
June 30, 2021
Dr Cash 1,020,000
(1,000,000 * 102/100)
Cr 10% Bonds payable 1,000,000
(1,000,000 * 100/100)
Cr Premium on bonds 20,000
(1,000,000 * 2/100)
(To record issue of new bonds at premium)
CALCULATION for unamortized discount :
Discount at the time of issue 15,400
(2%*770,000)
Less: Discount amortised till june 30, 2021 (15,400 / 40 * 18) (6,930)
Unamortized discount 8,470
We made use of 18 because the interest was been given twice in a year which is December 31 and June 30
CALCULATION for loss on redemption :
Redemption of bonds 793,100
(103*770,000)
Less: Carrying value (761,530)
(770,000 - 8,470)
Loss on redemption 31,570
b. Preparation of the entry required on December 31, 2021, to record the payment of the first 6 months' interest and the amortization of premium on the bonds.
Dec 31, 2021
Dr Interest expense 49,500
(50,000-500)
Dr Premium on bonds payable 500
(20,000 / 40)
Cr Cash 50,000
(1,000,000 * 10% * 6/12)
(To record the interest expense for 6 months)
answer:
Credit Card Interest Charges January-June 2012
The bank that issues Card X
✔ exceeded
the legal interest rate for five of the six months.
Because of this, the bank that issues Card X is likely to be investigated by the
✔ CFPB
.
