Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed
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 POST OR SHARE 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.: a. Calculate the issue price of the notes payable. b. Calculate the face value of the bond c. 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Systems Auditing A Practitioners Guide To Quality And Management Systems Audit

Authors: Dr Warren Doudle

1st Edition

B0C6W3G4W4, 979-8397130271

More Books

Students also viewed these Accounting questions