Prepare the journal entry on July

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Reference no: EM132848648

Question - On March 1, 2002, the FI Company issued bonds dated January 2, 2002 with the following characteristics:

Face value $20,000,000

Coupon rate 5.6%

Yield to maturity 8%

Coupon payment dates June 30, Dec. 31

Maturity 15 years

The FI Company's year-end is December 31.

Assuming the FI Company uses the effective interest method.

Required -

1. Prepare all journal entries relating to this bond issue for the year 2002.

2. Assume that on July 2, 2008; the company redeems one half of the bond issue on the open market at 98. Prepare the journal entry on July 2, 2008.

Reference no: EM132848648

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