Question
Trey Incorporated issued bonds on January 1, 2017. The face value of the bonds is $6,000,000 and the contract rate of interest is 8%. They
Trey Incorporated issued bonds on January 1, 2017. The face value of the bonds is $6,000,000 and the contract rate of interest is 8%. They are 10-year bonds and interest payment dates are June 30 and December 31. The market rate of interest at the time of issuance was 10%.
REQUIRED:
- What is the bond issuance price?
- What amount of interest expense should be reported for the period from July 1 to December 31, 2018?
- Suppose that on January 1, 2019, $3,000,000 face value of these bonds were repurchased in the market for $2,750,000 in cash and retired. What is the amount of the gain or loss recorded in this transaction?
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Advanced Financial Accounting
Authors: Thomas H. Beechy
5th Edition
0131236997, 9780131236998
