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Questions (Total points: 50 points) Part 3: Long Long Question 1 Suggested Time: 20 minutes (Total points: 20 points) Note: You must show ALL work
Questions (Total points: 50 points) Part 3: Long Long Question 1 Suggested Time: 20 minutes (Total points: 20 points) Note: You must show ALL work to receive full (or partial) credit. On July 1, 2018, Remington Chemical Company issued $40,000 face value, 12%, 4-year bonds at $35,403. The prevailing rate on the market is 16%. Remington uses the effective-interest method to amortize bond premium or discount. The bonds pay semi-annual interest on each July 1 and January 1. ALL INTEREST RATES ARE ANNUAL Instructions (Round all computations to the nearest dollar.) Part (A): Prepare the journal entries to record the following transactions. (1) The issuance of the bonds on July 1, 2018. (4 points) Write journal entry here: Clearly show work below. 12 (2) The payment of interest and the amortization of the premium or discount on July 1, 2019 assuming no accrual of interest on June 30, 2019. (6 points) YOU MUST SHOW ALL OF YOUR CALCULATIONS TO RECEIVE FUILL POINTS. t is the Write journal entry here: Clearly show work below. s od b Part (B): Required: Determine the total cost of borrowing over the life of the bond. (4 points) Clearly show work below. FUOY 1/101 Part (C): Suppose the bond is redeemed before maturity after the 2nd semiannual interest period and the company uses effective rate amortization. If the company retires the bond at 99, what is the gain or loss recognized on redemption? What is the journal entry the company records for this transaction? (6 points) elaoi moA Write journal entry here: Clearly show work below. C00. (0008) 0002 000,11 000.00 000 08 (0008 0000R12 000.00 (000,05) 000,81 00004 000.81 000.01 (00) 2.4000 eldaviooon a w. irob tot so oll Y ve noitaloo bals atbA latol Xdincblobooi2 000.01 2 DOO 00 00BE1 iid oldaveaoo sids sfdavi thon botano 181lo zanox miiq -bi s bon nlodoo bns aiilidail lo 000 0000 CaO dh oiemolni la 000,012 0S l bmb 310E Binu bns bonsfoob Wallt S00,21 x1 b0002121hop 000 217
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