Calculate the gain or loss on the withdrawal of the bonds

Reference no: EM132647216

Question - Alfa issued bonds with an even value of $60 million and a nominal interest rate of 7%. Bonuses pay interest every six months on January 1 and July 1. They aired on July 1, 2019 and lasted for 15 years on that date. At the date of issue the market interest rate (yield) was 8.5%.

Assume the same data as in Exercise 1, except that the bonds do NOT pay periodic interest to:

a. Prepare the journal entry to record the issuance of the bonds on July 1, 2019.

b. Prepare the wage entry for July 1, 2021.

c. If the company withdraws them in the amount of $ 43 million after five years until the bonds mature, calculate the gain or loss on the withdrawal of the bonds.

Reference no: EM132647216

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