Record the issue of the bonds on October

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Question - On October 1, 2021, PFQ Corp. issued $800,000 of 10-year, 5% bonds at 98. The bonds pay interest annually on October 1. PFQ's year end is September 30.

Instructions -

a. Record the issue of the bonds on October 1, 2021.

b. Calculate the effective rate using Excel or a financial calculator.

c. Prepare effective-interest amortization table for these bonds up to and including October 1, 2024.

d. Record the accrual of interest at September 30, 2022.

e. Record the interest payment on October 1, 2022.

f. Assuming instead that PFQ Corp .has a December 31 year end, prepare the adjusting entry related to these bonds on December 31, 2021, as well as the subsequent interest payment on October 1, 2022.

g. Assume that on October 1, 2022, after payment of the interest, PFQ redeems all of the bonds at 97. Record the redemption of the bonds.

Reference no: EM132604295

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