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The following are selected account balances for ABC Co . at 3 1 December 2 0 1 1 : * Statement of Financial Position: Non

The following are selected account balances for
ABC Co. at 31 December 2011:
*Statement of Financial Position:
Non-Current Liabilities
Bonds payable $893,435
Notes Payable $1,295,887
Current liabilities
Interest Payable $100,000
*Cash Flow Statement:
Cash Flow from Financing Activities
Note Payable Installment $400,000
*Income Statement:
Interest Expense $246,466.9
Further Information:
The Bonds payable were issued on 01 January
2011. They are 10-year bonds that bear a stated rate of 10% with interest paid annually on January 01. The periodic amortization for 2011 was $6439.5
ABC Co. uses the effective-interest method of amortization.
The notes payable are 5-year, zero-interest bearing notes that are issued on 01
January 2011 and payable in equal installments of $400,000 on December 31.
Required:
For ABC Co.:
Calculate the issue price of the notes payable.
Calculate the face value of the bond
Assume that ABC Co. extinguished 50% of bonds on January 2,2012, by giving up equipment with a fair value of $300,000. The equipment had an original cost of $850,000 and an accumulated depreciation of $400,000 as of January 2,2012.
Prepare the journal entry on January 2,2012.

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