Fredericton Aerospace Inc.raised $5,369,210 by selling $5,000,000 of six-year,12% bonds dated January 1,2013.Fredericton used part of the proceeds to pay its investment bank's fee of $100,000 and related legal and accounting fees of $600,000.
Interest is payable on June 30 and December 31 each year.Fredericton can call the bonds on January 1,2016 at 103.The company exercises this privilege,redeeming 40% of the bonds on the call date and retiring them.The company year ends on December 31.
Required:
Prepare journal entries to record:
a.The issuance of the bonds on January 1,2013.
b.Before completing the entries for parts (b)and (c),prepare the amortization table for the bonds through to December 21,2015.Prepare entry for the payment of interest and related amortization on December 31,2015.
c.Repurchase of the bonds on January 1,2016.

Question

Quizplus · Accepted Answer

The Answer of Fredericton Aerospace Inc.raised $5,369,210 by selling $5,000,000 of six-year,12% bonds dated January 1,2013.Fredericton used part of the proceeds to pay its investment bank's fee of $100,000 and related legal and accounting fees of $600,000.
Interest is payable on June 30 and December 31 each year.Fredericton can call the bonds on January 1,2016 at 103.The company exercises this privilege,redeeming 40% of the bonds on the call date and retiring them.The company year ends on December 31.
Required:
Prepare journal entries to record:
a.The issuance of the bonds on January 1,2013.
b.Before completing the entries for parts (b)and (c),prepare the amortization table for the bonds through to December 21,2015.Prepare entry for the payment of interest and related amortization on December 31,2015.
c.Repurchase of the bonds on January 1,2016.