On December 1, 2021, Barden Company issued 10% bonds with a face amount of $20...
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Accounting
On December 1, 2021, Barden Company issued 10% bonds with a face amount of $20 million. The bonds mature in 5 years. For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on May 31 and November 30. AVS is a calendar-year corporation.
1. Determine the price of the bonds at December 1, 2021.Explain how you compute this price.
2.Prepare the journal entry to record the bond issuance on December 1, 2021.
3. Prepare an amortization table using the effective interest method.
4. Prepare the journal entry (using the effective interest method) on December 31, 2021 (adjusting entry, no cash payment)
5. Prepare the journal entries (using the effective interest method) on May 31, 2022(1st payment).
6. What would be the journal entry if all bonds are retired at 103 on June 1, 2023 right after the third payment.
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