Rockwood Company issued $100,000 of 10% bonds on November 1, 2007 at 103. Interest on the bonds

Question:

Rockwood Company issued $100,000 of 10% bonds on November 1, 2007 at 103. Interest on the bonds is payable on November 1 and May 1 of each year, and the maturity date is November 1, 2017. Rockwood Company retired bonds with a face value of $20,000 on February 1, 2009, at 98 plus accrued interest. The company uses straight-line amortization and reverses any calendar year-end adjusting entries.

Required

1. Prepare the journal entry to record the issuance of the bonds on November 1, 2007.

2. Prepare all the journal entries to record the interest expense during 2008.

3. Prepare the journal entries to record the retirement of $20,000 of the bonds on February 1, 2009.

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... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...