Question
On January 1, 20x1, Layfayette Corporation deposited a deed of trust with the trustees of its bondholders that authorized it to issue $1,000,000 of 5%,
On January 1, 20x1, Layfayette Corporation deposited a deed of trust with the trustees of its bondholders that authorized it to issue $1,000,000 of 5%, 20 year bonds dated January 1, 20x1, and paying interest on each June 30 and December 31.
REQUIRED: Layfayette Corporation sold the entire issue on January 1, 20x1 at 99. Record the journal entries necessary at June 30, 20x1 for the payment of six months of interest and for six months of amortization.
REQUIRED: Given the same information in part (A) above, determine the following:
1. $_____________The book value of the total original issue at January 1, 20x5 (exactly 4 years later)
2. $________________The gain or loss on the retirement of of the original issue at 105 on January 1, 20x5 (Note, indicate gain or loss in your answer) .
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