On June 30, 2012, Crane Company issued 12% bonds with a par value of $770,000 due in 20 years. They were issued at 98 and

Best Writers accounting, business-managerial-accounting On June 30, 2012, Crane Company issued 12% bonds with a par value of $770,000 due in 20 years. They were issued at 98 and

accounting, business-managerial-accounting

On June 30, 2012, Crane Company issued 12% bonds with a par value of $770,000 due in 20 years. They were issued at 98 and

On June 30, 2012, Crane Company issued 12% bonds with a par value of $770,000 due in 20 years. They were issued at 98 and were callable at 103 at any date after June 30, 2020. 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, 2021, and to issue new bonds. New 10% bonds were sold in the amount of $1,000,000 at 102; they mature in 20 years. Crane Company uses straight-line amortization. Interest payment dates are December 31 and June 30. (a) Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2021. (b) Prepare the entry required on December 31, 2021, to record the payment of the first 6 months’ interest and the amortization of premium on the bonds. Transcribed Image Text: Account Titles and Explanation
Debit
Credit
iе 30, 2021
Bonds Payable
770000
Loss on Redemption of Bonds
Discount on Bonds Payable
Cash
793100
(To record the redemption of the old issue)
е 30, 2021
Cash
Bonds Payable
Premium on Bonds Payable
(To record the sale of the new issue)
c. 31, 2021
Interest Expense
Premium on Bonds Payable
Cash Transcribed Image Text: On June 30, 2012, Crane Company issued 12% bonds with a par value of $770,000 due in 20 years. They were issued at 98 and were
callable at 103 at any date after June 30, 2020. 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, 2021, and to issue new bonds. New 10% bonds were sold in the amount of
$1,000,000 at 102; they mature in 20 years. Crane Company uses straight-line amortization. Interest payment dates are December
31 and June 30.
(a)
Prepare journal entries to record the redemption of the old issue and the sale of the new issue on June 30, 2021.
(b)
Prepare the entry required on December 31, 2021, to record the payment of the first 6 months’ interest and the
amortization of premium on the bonds.
(Round answers to O decimal places, e.g. 38,548. If no entry is required, select “No Entry” for the account titles and enter O for the amounts.
Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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