South Company issued 10-year, 10% bonds with a par value of $500,000 on December 31, 2006 for $700,000. Interest is paid semiannually on June 30 and December 31. On July 1, 2014 $300,000 of the par value bonds were purchased by Prince Company for $315,000. Do not use a premium account on Prince. 1. In parallel columns for the issuer and investor (as a long term investment) give all journal entries for July 1, 2014 and December 31, 2014. Assume the accounting period for each company ends on December 31. Use straight line amortization. 2. Compute the investment in Bonds account Balance at December 31, 2014.

Bond:Bond is debt to company. Simply, it refers to money loan from investor to the borrower which…

1. In parallel columns for the issuer and investor (as a long term investment) give all journal entries for July 1, 2014 and December 31, 2014. Assume the accounting period for each company ends on December 31. Use straight line amortization. 2. Compute the investment in Bonds account Balance at December 31, 2014.

1. In parallel columns for the issuer and investor (as a long term investment) give all journal entries for July 1, 2014 and December 31, 2014. Assume the accounting period for each company ends on December 31. Use straight line amortization. 2. Compute the investment in Bonds account Balance at December 31, 2014.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 6PA: Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1,...

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