Question
On June 30, 2012, Skysong Company issued 12% bonds with a par value of $790,000 due in 20 years. They were issued at 98 and
On June 30, 2012, Skysong Company issued 12% bonds with a par value of $790,000 due in 20 years. They were issued at 98 and were callable at 104 at any date after June 30, 2020. Because of lower interest rates and a significant change in the companys credit rating, it was decided to call the entire issue on June 30, 2021, and to issue new bonds. New 8% bonds were sold in the amount of $1,050,000 at 102; they mature in 20 years. Skysong Company uses straight-line amortization. Interest payment dates are December 31 and June 30.
(a) | Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2021. | |
(b) | Prepare the entry required on December 31, 2021, to record the payment of the first 6 months interest and the amortization of premium on the bonds. |
(Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No. | Date | Account Titles and Explanation | Debit | Credit | |
(a) |
| ||||
(To record the redemption of the old issue) | |||||
June 30, 2021Dec. 31, 2021 | |||||
(To record the sale of the new issue) | |||||
(b) |
| ||||
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