Margaret Rose Company sold $4,000,000, 8%, 20-year bonds on January 1, 2007.

The bonds were dated January 1, 2007, and pay interest on December 31. The bonds were sold at 98.

Problems: Set A 517 Journalize and post note transactions; show balance sheet presentation.

(S@MZa7)

(b) Interest Payable $605 Prepare journal entries to record interest payments and redemption of bonds.

(SO 5, 6)

Prepare journal entries to record issuance of bonds, interest, balance sheet presentation, and bond redemption.

(SO 5, 6,71

(f) Loss $10,000 Prepare journal entries to record issuance of bonds, show balance sheet presentation, and record bond redemption.

(SO'5,06) 20)

518 CHAPTER 10

(c) Loss $152,000 Calculate and comment on ratios.

(SO 7)

Prepare journal entries to record interest payments, straight-line discount amortization, and redemption of bonds.

(SO 5, 6, 8)

Reporting and Analyzing Liabilities Instructions

(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2007.

(b) At December 31, 2007, $4,000 of the bond discount had been amortized. Show the balance sheet presentation of the bond liability at December 31, 2007. (Assume that interest has been paid.)

(c) At December 31, 2008, when the carrying value of the bonds was $3,928,000, the company redeemed the bonds at 102. Record the redemption of the bonds assuming that interest for the year had already been paid.