Question 6

Riverbed Company had bonds outstanding with a maturity value of $292,000. On April 30, 2017, when these bonds had an unamortized discount of $11,000, they were called in at104. To pay for these bonds, Riverbed had issued other bonds a month earlier bearing a lower interest rate. The newly issued bonds had a life of 10 years. The new bonds were issued at103(face value $292,000).

Ignoring interest, compute the gain or loss.

Loss on redemption$

Ignoring interest, record this refunding transaction.(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.)

Account Titles and Explanation

Debit

Credit

(To record redemption of bonds payable)

(To record issuance of new bonds)

Question 5 On January 1, 2017, Grouper Company makes the two following acquisitions. 1 . 2 . Purchases land having a fair value of $250,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $421,265. Purchases equipment by issuing a 6%, 9-year promissory note having a maturity value of $380,000 (interest payable annually). The company has to pay 11% interest for funds from its bank. Record the two journal entries that should be recorded by Grouper Company for the two purchases on January 1, 2017. (b) Record the interest at the end of the first year on both notes using the effective-interest method. (a) (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. 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 (a) 1. January 1, 2017 2. January 1, 2017 (b) 1. December 31, 2017 2. December 31, 2017 Account Titles and Explanation Debit Credit