What did you find to be the most challenging part of this problems? Explain why.
Snyder Software Inc. successfully developed a new spreadsheet program. However, to produce and market the program, the company needed $2.0 million of additional financing. On January 1, 2007, Snyder borrowed money as follows.
1. Snyder issued $500,000, 11%, 10-year bonds. The bonds sold at face value and pay interest on January 1.
2. Snyder issued $1.0 million, 10%, 10-year bonds for $886,996. Interest is payable on January 1. Snyder uses the straight-line method of amortization.
Instructions:
A) For the 11% bonds, prepare journal entries for the following items.
a. The issuance of the bonds on January 1, 2007.
b. Accrue interest expense on December 31, 2007.
c. The payment of interest on January 1, 2008.
B) For the 10-year, 10% bonds:
Journalize the issuance of the bonds on January 1, 2007.
Prepare the entry for the redemption of the bonds at 101 on January 1, 2010, after paying the interest due on this date. The carrying value of the bonds at the redemption date was $920,897.