On October 1, 2013, PFQ Corp. issued $800,000 of 10-year, 5% bonds at 98. The bonds pay
Question:
On October 1, 2013, PFQ Corp. issued $800,000 of 10-year, 5% bonds at 98. The bonds pay interest annually on October 1. PFQ's year end is September 30.
Instructions
(a) Record the issue of the bonds on October 1, 2013.
(b) Record the accrual of interest on September 30, 2014, assuming the amortization amount is $1,257.
(c) What amounts related to the bonds would be reported as current and non-current in the liabilities section of PFQ's September 30, 2014, balance sheet?
(d) Record the payment of interest on October 1, 2014.
(e) Assume that on October 1, 2014, aft er payment of the interest, PFQ redeems all of the bonds at 97. Record the redemption of the bonds.
Taking It Further
What was the market rate of interest on October 1, 2013, when PFQ issued the bonds?
Step by Step Answer:
a 2013 Oct 1 Cash 800000 98 784000 Bonds Payable 784000 b 2014 Sep 30 Interest Expense 41257 Bonds ...View the full answer
Accounting Principles Part 3
ISBN: 978-1118306802
6th Canadian edition Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow
