Reference no: EM132441373
Question -
1. Cullumber Company issued $650,000 of 5-year, 9% bonds at 96 on January 1, 2020. The bonds pay interest annually.
Prepare the journal entry to record the issuance of the bonds
Compute the total cost of borrowing for these bonds.
Prepare the journal entry to record the issuance of the bonds, assuming the bonds were issued at 102
Compute the total cost of borrowing for these bonds, assuming the bonds were issued at 102.
2. On May 1, 2020, Sheridan Corp. issued $680,000, 9%, 5-year bonds at face value. The bonds were dated May 1, 2020, and pay interest annually on May 1. Financial statements are prepared annually on December 31.
Prepare the journal entry to record the issuance of the bonds.
Prepare the adjusting entry to record the accrual of interest on December 31, 2020.
Show the balance sheet presentation on December 31, 2020.
Prepare the journal entry to record payment of interest on May 1, 2021.
Prepare the adjusting entry to record the accrual of interest on December 31, 2021.
Assume that on January 1, 2022, Sheridan pays the accrual bond interest and calls the bonds. The call price is 104. Record the payment of interest and redemption of the bonds.