Problem Data 1 2 On January 2, 2014, XYZ Company issued callable bonds at 98.5. Bond details are: 3 4 Face Value of Bond issue $ 6,500,000 5 Coupon Rate 5% 5 Semi-Annual Interest Payment dates January 2 and July 1 7 Maturity January 2, 2028 3 On January 2, 2020, the bonds were called and redemmed at face value plus one year's interest payment. 1 Accounts used in XYZ Chart of Accounts: 2 Cash 3 Bonds Payable (Discount or Premium) on Bonds Payable (use whichever is applicable) 5 Interest Expense 5 Assume any discount or premium on Bonds Payable is amortized using the straight-line method. 3 Calculations 1 1. What were the proceeds XYZ received from the bond issue, and the journal entry recorded, on January 2, 2014? 2 3 1 6,500,000 enter data in blue cells 5 5 Face Value Price Proceeds enter formulas in yellow cells debit credit 3 Journal Entry (you may not need to use every row provided) 1 Account 2 3 4 5 enter data in blue cells 7 2. Journalize the semi-annual entry to record the payment of interest and (discount/premium) amortization. enter data in blue cells Total (Discount / Premium) on Bonds Payable number of amortization periods semi-annual amortization amount enter formulas in yellow cells enter data in blue cells Face Value of Bonds Payable annual coupon rate semi-annual cash interest due enter formulas in yellow cells Journal Entry (you may not need to use every row provided) Account debit credit enter data in blue cells 3. What is the balance in the (Discount / Premium) on Bonds Payable account on the date of redemption? enter data in blue cells Semi-annual amortization amount number of periods amortized Opening balance in (Discount / Premium) on Bonds Payable account Total amount amortized Balance in account on date of redemption enter formulas in yellow cells 4. Assume that the usual semi-annual amortization entry was recorded for the period ending January 2, 2020. Record the Journal Entry on January 2, 2020 to redeem the bonds. Don't forget to include the call premium (see information above) 1 2 What is the amount of the call premium? enter data in blue cells 3 4 5 Journal Entry (you may not need to use every row provided) 5 Account debit credit 3 7 1 2 3