On January 1, 2015, Fleming Ltd. issued 2,400,000 of 5-year, 8% bonds at 95; the bonds pay
Question:
To do so, the company will have to issue £2,000,000 (face value) of new 10-year, 11% bonds at par. The president asks you, as controller, "What is the feasibility of my proposed repurchase plan?"
Instructions
With the class divided into groups, answer the following.
(a) What is the carrying value of the outstanding Fleming 5-year bonds on January 1, 2017?
(Assume straight-line amortization.)
(b) Prepare the journal entry to redeem the 5-year bonds on January 1, 2017. Prepare the journal entry to issue the new 10-year bonds.
(c) Prepare a short memo to the president in response to her request for advice. List the economic factors that you believe should be considered for her repurchase proposal.
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Related Book For
Financial Accounting
ISBN: 978-1118978085
IFRS 3rd edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
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