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On January 1, 2008, the Evans Company issued callable bonds with a face value of $5,000,000 for

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On January 1, 2008, the Evans Company issued callable bonds with a face value of $5,000,000 for $4,750,000 cash. These bonds paid an annual interest of 10 percent payable semiannually on January 2 and July 1. The bonds were to be repaid on January 1, 2018. On January 1, 2013, the bonds were called and redeemed for $5,250,000. Make the journal entries for January 1, 2008, and January 1, 2013. (Assume that the bond discount was being written off on a straight-line basis. Ignore bond issuance and reacquisition costs.)
Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
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Accounting Texts and Cases

Accounting Texts and Cases

ISBN: 978-1259097126

13th edition

Authors: Robert Anthony, David Hawkins, Kenneth Merchant

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Callable bond: A bond that can be redeemed by the issuer before the maturity date, potentially leaving the bondholder without future interest payments. They usually offer higher yields than non-callable bonds. Puttable bond: A bond that gives the bondholder the right to sell the bond back to the issuer before the maturity date, providing flexibility to the bondholder. They typically offer lower yields than non-puttable bonds. Convertible bond: A bond that can be converted into a predetermined number of shares of the issuing company\'s common stock at the bondholder\'s discretion. They offer the potential for capital appreciation in addition to periodic interest payments and typically offer lower yields than non-convertible bonds. Zero coupon bond: A bond that does not pay periodic interest payments, but instead is sold at a deep discount to its face value and redeemed at face value upon maturity, providing a capital gain to the investor. They are often used to fund long-term projects and have longer maturities than other bonds.

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