On March 1,2002,the Shrivastava Company issued bonds dated January 2,2002 with the following characteristics:
Face value $20,000,000
Coupon rate 7.6%
Yield to maturity 8%
Coupon payment dates June 30,Dec.31
Maturity 15 years
The Shrivastava Company's year-end is December 31.
Required:
a.Assuming the Shrivastava Company uses the effective interest method,
i.Prepare all journal entries relating to this bond issue for the year 2002.
ii.Assume that on July 2,2008; the company redeems one half of the bond issue on the open market at 98.Prepare the journal entry on July 2,2008.
b.Repeat the above requirements on the assumption the straight-line method is used.

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The Answer of On March 1,2002,the Shrivastava Company issued bonds dated January 2,2002 with the following characteristics:
Face value $20,000,000
Coupon rate 7.6%
Yield to maturity 8%
Coupon payment dates June 30,Dec.31
Maturity 15 years
The Shrivastava Company's year-end is December 31.
Required:
a.Assuming the Shrivastava Company uses the effective interest method,
i.Prepare all journal entries relating to this bond issue for the year 2002.
ii.Assume that on July 2,2008; the company redeems one half of the bond issue on the open market at 98.Prepare the journal entry on July 2,2008.
b.Repeat the above requirements on the assumption the straight-line method is used.

On March 1,2002,the Shrivastava Company Issued Bonds Dated January 2,2002