Show all journal entries that would be made

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Q1. On July 1 2019, Green Lantern Corporation issued 40 year, 9%, $1 million bond, callable at 95. Bond payments are made annually on June 30. Green Lantern prepares their financial statements annually on December 31. The current market rate for this type of bond issue is 10%. Green Lantern uses the effective interest method to account for the bonds.

-Provide an excerpt of the 12/31/2019 balance sheet in good form.

-Show all journal entries that would be made in the 2020 fiscal year.

Q2. Green Lantern is considering refunding the bond with an 11% annual coupon bond with an equivalent par. He worries, however, about incurring a loss on the transaction. You advise Mr. Lantern that there are 2 types of losses that should be considered and offer to walk him through the information.

a. Discuss the conditions that would need to exist for this bond to be refunded at an economic loss.

b. Discuss the conditions that would lead to an accounting loss.

Reference no: EM133047385

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