Reference no: EM132600331

Question 1 - The Bradford Company issued 12% bonds, dated January 1, with a face amount of $97 million on January 1, 2021. The bonds mature on December 31, 2030 (10 years). For bonds of similar risk and maturity, the market yield is 14%. Interest is paid semiannually on June 30 and December 31.

Required:

1. Determine the price of the bonds at January 1, 2021.

2. to 4. Prepare the journal entries to record their issuance by The Bradford Company on January 1, 2021, interest on June 30, 2021 and interest on December 31, 2021 (at the effective rate).

Question 2 - The balance sheet of Indian River Electronics Corporation as of December 31, 2020, included 13.25% bonds having a face amount of $90.4 million. The bonds had been issued in 2013 and had a remaining discount of $3.4 million at December 31, 2020. On January 1, 2021, Indian River Electronics called the bonds before their scheduled maturity at the call price of 104.

Required: Prepare the journal entry by Indian River Electronics to record the redemption of the bonds at January 1, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)