On October 1, 2011, PFQ Corp. issued $600,000 of 10-year, 5% bonds at 100. The bonds pay
Question:
Instructions
(a) Identify the coupon and market rates of interest on October 1, 2011, when PFQ issued the bonds.
(b) Record the issue of the bonds on October 1, 2011.
(c) Prepare the adjusting entry to record the accrual of interest on December 31, 2011.
(d) Record the first interest payment on April 1, 2012.
(e) Record the second interest payment on October 1, 2012.
(f) Assume that on October 1, 2012, immediately after paying the semi-annual interest, PFQ redeems all of the bonds at 102. Record the redemption of the bonds.
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...
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a Since the price paid was 100 at par the coupon and market rates are the same at 5 2011 b Oct 1 ...View the full answer
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Related Book For 
Financial Accounting Tools for Business Decision Making
ISBN: 978-1118024492
5th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
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