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Prepare the journal entries to record the redemption

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Question - SHU Inc. issued a 4-year bond with face value of $400,000 on 1 April, 2010. The annual coupon rate is 10% p.a. Interests are paid semi-annually on 31 March and 30 September. The effective annual interest rate is 12% p.a. Round your calculation to the nearest dollar.

-Prepare the journal entries on 1 April, 2010 to record the issuance of the bond.

-Prepare the journal entries on 30 September, 2010 to record the first interest payment.

-Prepare the journal entries on 31 December 2010, the fiscal year end of 2010.

-Prepare the journal entries on 31 March 2011 to record the second interest payment.

-On 31 March 2011, after the second interest payment, SHU. Co. redeemed half of the bond at $220,000. Prepare the journal entries to record the redemption.

Reference no: EM133007111

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