Solution-Prepare journal entry requires at july for banff

Prepare journal entry requires at july for banff corporation

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Reference no: EM132464032

Banff corporation issued $500,000 of 8% callable (payable each June 30 and December 31), 5 year bonds on July 1, 2019 for net cash proceeds of $542,600 (ie: after considering the bond issue costs of $3,000 paid on issuance).

Their fiscal year end is December 31. On January 1,2020, the corporation exercised its call privilege and retired the bonds for $535,000.
Banff uses the effective interest method for amortization of any discount or premium and measures debt using the amortized cost basis.

REQUIRED:

Question 1) Prepare the journal entries requires at (a) July 1, 2019; b) December 31, 2019 and c) January 1,2020.

Question 2) How would your response change if Banff measured he debt using the fair value basis? Assume that the fair value on December 31, 2019/January 1, 2020 was $533,000. Provide journal entires for July 1, 2019, December 31, 2019 and January 1, 2020.

Reference no: EM132464032

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Prepare journal entry requires at july for banff corporation

Reference no: EM132464032

Reference no: EM132464032

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