Solution-Prepare the balance sheet presentation of the

Prepare the balance sheet presentation of the bonds payable

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Question - On December 31, 2020, Sierra Corp. issues 4 percent, 10-year convertible bonds with a maturity value of $4,500,000. The semi-annual interest dates are June 30 and December 31. The market interest rate is 5 percent, and the issue price of the bonds is 92.2054. Sierra Corp. amortizes bond premium and discount by the effective-interest method.

Required - Arrange an effective-interest method amortization table for the first four semi-annual interest periods.

Journalize the following transactions:

-Issuance of the bonds on December 31, 2020. Credit Convertible Bonds Payable.

-Payment of interest on June 30, 2021.

-Payment of interest on December 31, 2021.

-Retirement of the bonds with a maturity value of $200,000 on July 2, 2022. Sierra Corp. purchases the bonds at 96.00 in the open market.

-Conversion by the bondholders on July 2, 2022, of bonds with a maturity value of $400,000 into 5,000 Sierra Corp. common shares.

Required - Prepare the balance sheet presentation of the bonds payable that are outstanding at December 31, 2022.

Reference no: EM132824802

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Prepare the balance sheet presentation of the bonds payable

Reference no: EM132824802

Reference no: EM132824802

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