Question - On January 1, 2011, Jose, Inc. issued a $1,000, 8%, five-year bond payable for $1,060. The bond was dated on January 1, 2011, and interest is payable each December 31. Jose, Inc. has a December 31 year-end. Jose uses the straight-line method of amortization.
Requirements: You must provide all supportive computations in order to receive full credit.
A. Prepare the entry required on January 1, 2011.
B. Prepare the entry required on December 31, 2011.
C. Prepare a partial balance sheet, in good form, on December 31, 2011.
D. If the bond issue was retired for $1035 on January 1, 2012, what would be the gain or loss, if any, on this transaction? If it exists, identify it as a gain or loss and the dollar amount.