The following in taken from the Magana Corp statement of financial position. MAGANA CORPORATION Statement of Financial

Question:

The following in taken from the Magana Corp statement of financial position.
MAGANA CORPORATION
Statement of Financial Position (partial)
December 31, 2011
Non-current liabilities
Bonds payable, 7% due January 1, 2022 ....... $2,310,000
Current liabilities
Bond interest payable (for 6 month from
July 1 to December 31) ............ $ 84,000
Interest is payable semiannually on January 1 and July 1. The bonds are callable on any semiannual interest date. Magana uses straight-line amortization for any bond premium or discount. From December 31, 2011, the bonds will be outstanding for an additional 10 years (120 months).

Instructions
(Round at computation to the nearest euro)
(a) Journalize the payment of bond interest on January 1, 2012.
(b) Prepare the entry to amortize bond discount and to pay the interest due on July 1, 2012, assuming that interest was not accrued on June 30.
(c) Assume that on July 1, 2012, after paying interest. Magana Corp. calls bonds having a of $800,000. The call price is 101. Record the redemption of the bonds.
(d) Prepare the adjusting entry at December 31, 2012, to amortize bond discount and to accrue interest on the remaining bonds.

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...