Reference no: EM132822803
Question - On January 1, 2004, Steadman issues $ 350,000 of 10%, 15-year bonds at a price of 97.75. Six year later, on January 01, 2010, Steadman retires 20% of these bonds by buying them on the open market at 104.50. All interest is accounted for and paid through December 31, 2009, the day before the purchase. The Straight line method is used to amortize the bond discount.
1. Prepare the journal entry to record the issuance of bond at January 1, 2004.
2. How much amortization of bonds is recorded on bonds for entire period from January 01, 2004, through December 31, 2009?
3. What is the carrying (book) value of bonds as the close of business on December 31, 2009? What is the carrying value of the 20% soon-to-be retired bonds on this same date?
4. How much did the company pays on January 01, 2010, to purchase the bonds that it retired?. What is the amount of gain or loss from retiring the bonds?
5. Prepare the journal entry to record the bond retirement at January 1, 2010.
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