EXERCISE 10-23 RETIREMENT OF DEBT BEFORE MATURITY The long-term debt section of Starr Company's balance sheet as
Question:
EXERCISE 10-23 RETIREMENT OF DEBT BEFORE MATURITY The long-term debt section of Starr Company's balance sheet as of December 31, 2001, included 9% bonds payable of $200,000 less unamortized discount of $16,000. Further examination revealed that these bonds were issued to yield 10%. The amortization of the bond discount was recorded using the effective-interest method. Interest was paid on January 1 and July 1 of each year On July 1, 2002, Starr retired the bonds at 103 before maturity.
Prepare the journal entries to record the July 1, 2002, payment of interest, including the amortization of the discount since December 31, 2001, and the early retirement on the books of Starr Company.
Step by Step Answer:
Intermediate Accounting
ISBN: 9780324013078
14th Edition
Authors: Fred Skousen, James Stice, Earl Kay Stice