Xonic Corporation issued $8 million of 20-year, 8 percent bonds on April 1, 2015 at 102. Interest
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Question:
Xonic Corporation issued $8 million of 20-year, 8 percent bonds on April 1, 2015 at 102. Interest is due on March 31 and Sept. 30 of each year, and all of the bonds in the issue mature on March 31, 2035. Xonic's fiscal year ends on Dec. 31. Prepare the following journal entries:
a. April 1, 2015 to record the issuance of the bonds
b. Sept 30, 2015 to pay interest and to amortize the bond premium
c. march 31 2035, to pay interest, amortize the bond premium and retire the bonds at maturity (make 2 separate entries)
d. briefly explain the effect of amortizing the bond premium om (1) annual net income and (2) annual net cash flow from operating activities (ignore income tax effects)
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