Prepare the necessary journal entries to record the following transactions relat
ID: 2347904 • Letter: P
Question
Prepare the necessary journal entries to record the following transactions relating to the long-term issuance of bonds of Pitts Co: March 1 Issued 800000 face value Pitts Co. second mortgage, 8% bonds for 872160, including accrued interest. Interest is payable semiannually on Dec 1 and Jun 1 with the bonds maturing 10 years from this past Dec 1. The bonds are callable at 102.
June 1
Paid semiannual interest on Pitts Co. bonds. (Use straight-line amortization of any premium or discount.)
Dec 1
Paid semiannual interest on Pitts Co. bonds and purchased 400000 face value bonds at the call price in accordance with the provisions of the bond indenture.
Explanation / Answer
journal entries june 1 semi annual interest = 800000/10 =$ 80000 Dec 1 semi annual interest call price = $400000