Refer to PB10-5. Assume Methodical uses the effective-interest bond amortization method. PB10-5 ABC Entertainment, Inc. owns and
Question:
Refer to PB10-5. Assume Methodical uses the effective-interest bond amortization method.
PB10-5
ABC Entertainment, Inc. owns and operates 361 movie theatres worldwide, with 5,203 screens in Canada. Assume the company issued 11 percent bonds in the amount of $53,000,000 and then used all of these cash proceeds to retire bonds with a coupon rate of 13.6 percent. At that time, the 13.6 percent bonds had a carrying value of $50,000,000.
Required:
1. Prepare a bond amortization schedule.
2. Give the journal entry to record the bond issue.
3. Give the journal entries to record the interest payments on December 31, 2017, and 2018.
4. Give the journal entry to record the interest and face value payment on December 31, 2019.
5. Assume the bonds are retired on January 1, 2019, at a price of 101. Give the journal entry to record the bond retirement.
Step by Step Answer:
Fundamentals of Financial Accounting
ISBN: 978-1259269868
5th Canadian edition
Authors: Fred Phillips, Robert Libby, Patricia Libby, Brandy Mackintosh