Question 2 (20 marks) Trump Corporation wished to raise money to help finance a series of upcoming projects On July 1, 20x3, the company issued bonds with a face value of $3,500,000 due on July 1,2079, paying interest at a rate of 6% on January 1 and July 1 each year. The bonds were issued to yield 7%. Trump Corporation's fiscal year-end was December 31 Part 1 (12 marks) a) Calculate the issuance proceeds for the bonds b) Prepare the first five rows of a Bond Premium / Discount Amortization Schedule (lie. rows for 20x3, 2014, and 20x5 only) for Trump Corporation c) Prepare all journal entries related to the bonds in the books of Trump Corporation for the fiscal year ended December 31, 2013 d) After some time went by, Trump Corporation experienced some very profitable years. to such an extent that the company decided to retire some of the bonds early. On January 1, 20x6, after payment of bond interest, Trump Corporation repurchased half of the bond issue at 90. Prepare the journal entries to record the payment of interest and the retirement of the bonds. Part 2 (8 marks) Biden Corp purchased $600,000 of the bonds issued by Trump Corporation from the open market on January 1, 20x4 On this date, the market interest rate was 6.5%. Assume that Biden Corp would not receive the coupon interest payment for January 1, 20x4. Biden Corp has a September 30 year-end and decides to account for this investment under the Amortized Cost model. Preparshe journal entries related to Biden Corp's Investment in Trump Corporation bonds for the fiscal year ended September 30, 20x4. Question 2 (20 marks) Trump Corporation wished to raise money to help finance a series of upcoming projects On July 1, 20x3, the company issued bonds with a face value of $3,500,000 due on July 1,2079, paying interest at a rate of 6% on January 1 and July 1 each year. The bonds were issued to yield 7%. Trump Corporation's fiscal year-end was December 31 Part 1 (12 marks) a) Calculate the issuance proceeds for the bonds b) Prepare the first five rows of a Bond Premium / Discount Amortization Schedule (lie. rows for 20x3, 2014, and 20x5 only) for Trump Corporation c) Prepare all journal entries related to the bonds in the books of Trump Corporation for the fiscal year ended December 31, 2013 d) After some time went by, Trump Corporation experienced some very profitable years. to such an extent that the company decided to retire some of the bonds early. On January 1, 20x6, after payment of bond interest, Trump Corporation repurchased half of the bond issue at 90. Prepare the journal entries to record the payment of interest and the retirement of the bonds. Part 2 (8 marks) Biden Corp purchased $600,000 of the bonds issued by Trump Corporation from the open market on January 1, 20x4 On this date, the market interest rate was 6.5%. Assume that Biden Corp would not receive the coupon interest payment for January 1, 20x4. Biden Corp has a September 30 year-end and decides to account for this investment under the Amortized Cost model. Preparshe journal entries related to Biden Corp's Investment in Trump Corporation bonds for the fiscal year ended September 30, 20x4
