Comment on the interpretation of any gain or loss

Reference no: EM133655641

Case: Sam Corp. issued 8%, 80,000 bonds on February 1, 2024. The bonds pay interest each July 31 and January 31 and were issued to yield 7% to investors. The bonds mature on January 31, 2034.

Required:

Compute the amount of cash Sam will receive when it issues these bonds.
Prepare journal entries required on the following dates
February 1, 2024 - issuance of the bonds.
July 31, 2024 - date of the first interest payment.
December 31, 2024 - accrual of interest through the end of the fiscal year.
January 31, 2025 - date of the second interest payment.
January 31, 2034 - the date the principal is repaid.
What would be the entry to record the issuance of the bonds if they are not issued until March 1 (that is, between interest dates)?
Under the original assumption - that the bonds are issued February 1, 2024 - How much would it cost Sam to pay off the bonds early (by repurchasing them from the open market) on August 1, 2030 if the market interest rate on that date is 6%?

a. Give the journal entry that would be required to account for the early repayment, and comment on the interpretation of any gain or loss that would be recorded.

Reference no: EM133655641

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