Question
3 The following is taken from the Kijak Corp. balance sheet. Current liabilities KIJAK CORPORATION Balance Sheet (partial) December 31, 2012 Interest payable (for 6
3 The following is taken from the Kijak Corp. balance sheet. Current liabilities KIJAK CORPORATION Balance Sheet (partial) December 31, 2012 Interest payable (for 6 months from July 1 to December 31) Long-term liabilities Bonds payable, 9%, due January 1, 2023 Less: Discount on bonds payable $2,400,000 90,000 $ 108,000 2,310,000 Interest is payable semiannually on January 1 and July 1. The bonds are callable on any semiannual interest date. Kijak uses straight-line amortization for any bond premium or discount. From December 31, 2012, the bonds will be outstanding for an additional 10 years (120 months). Instructions (6 Marks) (Round all computations to the nearest dollar). a. Journalize the payment of bond interest on January 1, 2013. b. Prepare the entry to amortize bond discount and to pay the interest due on July 1, 2013, assuming that interest was not accrued on June 30. c. Assume that on July 1, 2013, after paying interest, Kijak Corp. calls bonds having a face value of $800,000. The call price is 102. Record the redemption of the bonds. d. Prepare the adjusting entry at December 31, 2013, to amortize bond discount and to accrue interest on the remaining bonds
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