Answered: Prepare the journal entry for the…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 16E

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Belton Ltd. sold $6,790,000 of 8% bonds, which were dated March 1, 2020, on June 1, 2020. The bonds paid interest on September 1 and March 1 of each year. The bonds' maturity date was March 1, 2030, and the bonds were issued to yield 10%. Belton's fiscal year-end was February 28, and the company followed IFRS. On June 1, 2021, Belton bought back $2,790,000 worth of bonds for $2,690,000 plus accrued interest.

Prepare the journal entry for the scheduled interest payment on September 1, 2020

Prepare any year-end entry required at February 28, 2021

Prepare the entry required for the redemption of face value $2,790,000 of the bonds on June 1, 2021

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