Festive Favours Inc. ( Festive ) wanted to raise cash to fund its expansion into a new
Question:
Festive Favours Inc. Festive wanted to raise cash to fund its expansion into a new market by issuing longterm bonds. On January Festive sold $ in longterm bonds that will mature on December The bonds have a stated interest rate of Other bonds that Festive has issued in the past with identical terms have traded based on a market rate of The bonds pay interest semiannually on June and December
On January Festive decided to retire of the bonds. At that time the bonds were selling at Note that the bonds are to be accounted for using the effectiveinterest method.
a Prepare the journal entry for the issuance of the bonds on January
b Prepare all required journal entries after the issuance of the bond until December
c What is the total amount of interest expense related to these bonds that will be reported on Festive's December income statement?
d Calculate the amount of gain on loss on the partial retirement of the bonds on January then prepare the journal entries related to this partial retirement.
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill