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The following is taken from Walmart balance sheet: Walmart Partial Balance Sheet 31-Dec-20 Current Liabilities Interest payable 300,000 Long Term Liabilities Bonds payable 10%, due
The following is taken from Walmart balance sheet: | |||||||
Walmart | |||||||
Partial Balance Sheet | |||||||
31-Dec-20 | |||||||
Current Liabilities | |||||||
Interest payable | 300,000 | ||||||
Long Term Liabilities | |||||||
Bonds payable 10%, due Jan 1, 2026 | 3,000,000 | ? | |||||
Add: Premium on Bond Payable | 120,000 | 3,120,000 | |||||
Interest is payable annually on January 1st. The bonds are callable on any annual interest date. | |||||||
Walmart uses straight line amortization for any bond discount or premium. From December 31, 2020 | |||||||
the bonds will be outstanding for another 5 years, (60 months) | |||||||
A) Journalize the payment of the bond interest on January 1, 2021 | |||||||
B) Prepare the entry to amortize the bond discount and to accrue the interest due on December 31, 2021 | |||||||
C) Assume that on January 1, 2022, after paying interest, Walmart calls bonds having a face value of $2,000,000 | |||||||
The call price is 103. Record the redemption of the bonds | |||||||
D) Prepare the journal entry at December 31, 2022, to amortize the bond discount and to accrue interest | |||||||
on the remaining bonds |
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