The following information is taken from Lima Corp.??s balance sheet at December 31, 2011. Interest is payable
Question:
The following information is taken from Lima Corp.??s balance sheet at December 31, 2011.
Interest is payable annually on January 1. The bonds are callable on any annual interest date. Lima 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 all computations to the nearest dollar.)(a) Journalize the payment of bond interest on January 1, 2012.(b) Prepare the entry to amortize bond discount and to accrue the interest on December 31, 2012.(c) Assume on January 1, 2013, after paying interest, that Lima Corp. calls bonds having a face value of $400,000. The call price is 102. Record the redemption of the bonds.(d) Prepare the adjusting entry at December 31, 2013, to amortize bond discount and to accrue interest on the remaining bonds.
Balance SheetBalance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... 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...
Step by Step Answer:
a Jan 1 Interest Payable 96000 Cash 96000 b Dec 31 Inter...View the full answer
Financial Accounting Tools for business decision making
ISBN: 978-0470534779
6th Edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
