Reference no: EM132894037
Banshee Corp issued bonds with a face value of $100,000 and an eight-year life on January 1, 2011. The bonds' coupon interest rate is 10% and the current market interest rate is 7%. The bonds pay interest on July 1 and January 1. Banshee's year-end is December 31.
Problem a) Show the journal entry that Banshee Corp would make to record the bond issue on January 1, 2011.
Problem b) Assuming Banshee uses the effective interest method of allocating interest, amortization table showing the first 2 payments
Problem c) Assuming Banshee uses the effective interest method of allocating interest, show the journal entry for July 1, 2011, December 31, 2011 and January 1, 2012.
Problem d) Assume Banshee retires the bond payable at 103 on January 1, 2014 when the carrying value is $112,475. Record the entry.
Problem e) Assume instead that Banshee retires the bond payable at maturity on January 1, 2019.
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