On January 1, 2000, Audrey Corporation issued $100,000 of 10% coupon rate bonds to yield an...

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Accounting

On January 1, 2000, Audrey Corporation issued $100,000 of 10%coupon rate bonds to yield an effective rate of 12%. Interest ispaid semiannually on June 30 and December 31. The bonds mature infive years, i.e., on January 1, 2005. Audrey incurred $10,000 inissuance costs and has a September 30^th fiscal yearend.
Required:
Prepare the journal entry to record the bond issuance.
Prepare the amortization schedule for the entire bond’s life (5years).
Prepare the journal entries that Audrey Corporation would makeon:
December 31, 2000.
June 30, 2001.
September 30, 2001.
Prepare Audrey’s Statement of Cash Flows for the fiscal yearended September 30, 2001.
Assume that on September 30, 2001 Audrey calls the bonds for97. Prepare the journal entry to record the bond call.
Prepare Audrey’s Statement of Cash Flows for the fiscal yearended September 30, 2001 assuming the call took place.

Answer & Explanation Solved by verified expert

4.4 Ratings (668 Votes)

We first record the bond at its present value at the effective rate of 12 Period Cash flow Discount Rate 12 Present Value 1 5000 0892857143 446429 2 5000 0797193878 398597 3 5000 0711780248 355890 4 5000 0635518078 317759 5 5000 0567426856 283713 6 5000 0506631121 253316 7 5000 0452349215 226175 8 5000 0403883228 201942 9 5000 0360610025 180305 10 105000 0321973237 See Answer

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