BONDS ISSUED AT A DISCOUNT, REDEEMED AT A GAIN Ellis & Co. issued the following bonds at
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BONDS ISSUED AT A DISCOUNT, REDEEMED AT A GAIN Ellis & Co. issued the following bonds at a discount:
Date of issue and sale: .....April 1, 20-1
Principal amount: .......$400,000
Sale price of bonds: ......97
Denomination of bonds: .....$1,000
Life of bonds: .........10 years
Stated rate: ..........8%, payable semiannually on
...............September 30 and March 31
REQUIRED
Prepare journal entries for:
(a) Issuance of the bonds.
(b) Interest payment and discount amortization on the bonds on September 30, 20-1.
(c) Year-end adjustment on the bonds for 20-1.
(d) Reversing entry for the beginning of 20-2.
(e) Redemption of $50,000 of the bonds on April 1, 20-4, at 96.
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