On November 1, 20x1, Cheets Company issued 10% bonds with a face amount of $20 million. The bonds mature in 10 years. For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on April 30 and October 31. Bishop is a calendar-year corporation.
Required:
Determine the price of the bonds at November 1, 20x1.
Prepare the journal entry to record the bond issuance by cheets on November 1, 20x1.
Prepare the journal entries (using the effective interest method):
December 31, 20x1
April 30, 20x2
October 31, 20x2 *Assume no reversing entry is recorded on January 1, 20x2.(4.) What would be the journal entry if all bonds are retired at 103 on May 1, 20x3 after the third payment. III-1. Metro Products began operations in 20x1. Metro's fiscal year ends on December 31.
20x1:
(1) On October 1, Metro borrowed $8,000,000 cash and issued a 5-month promissory note with 10% interest payable at maturity.
(2) Metro recorded accrued interest.
20x2:
(3) Metro paid the promissory note on the March 1 due date.
Required:
Prepare the appropriate journal entries. III-2. On November 1, 20x1, a $216,000, 9-month, noninterest-bearing note is issued at a 10% discount rate.
Required:
(1) Prepare the appropriate journal entry to record the issuance of the note. (2) Prepare the appropriate journal entry on December 31, 20x1, to record interest on the note for the 20x1 financial statements. (3) Prepare the appropriate journal entry(s) on July 31, 20x2, to record interest and the payment of the note.