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Sammy Company issued $1,200,000 of 8%, 10-year bonds on 1 January 2019, and pays interest...

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Accounting

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Sammy Company issued $1,200,000 of 8%, 10-year bonds on 1 January 2019, and pays interest annually on each 31 December. At the time of the issuance, the market yield rate was 5%. Sammy Company uses effective interest method to calculate interest for the bonds. (4 marks) (4 marks) Required: (Round all calculations to nearest dollars) (a) Prepare journal entry to record the issuance of the bonds on 1 January 2019. (b) Prepare a bond amortization schedule up to and including 31 December 2022. (c) Prepare journal entry to record the payment of interest expense for the year ending 31 December 2019. (d) Assume that on 1 July 2022, Sammy Company retires 80% of the bonds at a cost of $1,200,000 plus accrued interest. Prepare the journal entries to record this retirement. (3 marks) (8 marks)

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