Problem:
SlamDunk, Inc. sells $300,000 of 10% bonds on February 1, 2003. The bonds pay interest on August 1 and February 1. The due date of the bonds is August 1, 2006. The bonds yield 12%. The company has a year end of December 31. Show the journal entries required on the following dates:
February 1, 2003
August 1, 2003
December 31, 2003
February 1, 2004
Required:
Question: Now, assume that on May 1, 2004, the company reacquires half the bonds ($150,000 face) for $154,000 including accrued interest. Assume that after the February 1 entry there is a remaining discount of $12,636. Prepare the journal entries required upon reacquisition.
Note: Please show how to work it out.