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On June 30,20XX, TChalla Co. issued 12% bonds with a par value of $800,000 due...

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Accounting

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On June 30,20XX, TChalla Co. issued 12% bonds with a par value of $800,000 due in 20 years. They were issued at 98 and were callable at 104 at any date after June 30,208. Because of lower interest rates and a significant change in the company's credit rating, it was decided to call the entire issue on June 30,209, and to issue new bonds. The remaining discount on the bonds at redemption was $8,800. 1. Prepare the journal entry to record the redemption on June 30,208. Bucky Barns Co. is having financial difficulty and therefore has asked Captain America Bank to restructure its $5 million note outstanding. The note has 3 years remaining and pays a current rate of interest of 10%. The present market rate for a loan of this nature is 12%. The note was issued at its face value. Captain America Bank agrees to accept land from Bucky Barns Co. in exchange for relinquishing its claim on this note. The land has a book value of $3,250,000 and a fair value of $4,000,000. 2. Prepare the journal entry to record the restructuring of this note in Bucky Barn's accounting system. 3. Prepare the journal entry to record the restructuring of this note in Captain America Bank's accounting system

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