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 30th 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.
