Recording the Refunding of Long-Term Debt On January 1, 2020, Rocket Corporation issued $100,000 of 6%, 20-year bonds at 98. The interest is payable each December 31. Rocket uses straight-line amortization. The company’s accounting period ends December 31. On January 1, 2029, Rocket issued $100,000, 5% 20-year, refunding bonds at par. On this date, the old 6% bonds could be purchased in the open market at 102. Rocket immediately purchased all of the 6% bonds. Required a. Provide the entry for issuance of the 6% bonds on January 1, 2020. b. Provide the entry for issuance of the 5% bonds on January 1, 2029. c. Provide the entry to record the extinguishment of the old bonds on January 1, 2029. Note: List multiple debits or credits (when applicable) in alphabetical order. Date Account Name Dr. Cr. a. Jan. 1, 2020 Answer Answer Answer Answer Answer Answer Answer Answer Answer b. Jan. 1, 2029 Answer Answer Answer Answer Answer Answer c. Jan. 1, 2029 Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer
Recording the Refunding of Long-Term Debt On January 1, 2020, Rocket Corporation issued $100,000 of 6%, 20-year bonds at 98. The interest is payable each December 31. Rocket uses straight-line amortization. The company’s accounting period ends December 31. On January 1, 2029, Rocket issued $100,000, 5% 20-year, refunding bonds at par. On this date, the old 6% bonds could be purchased in the open market at 102. Rocket immediately purchased all of the 6% bonds. Required a. Provide the entry for issuance of the 6% bonds on January 1, 2020. b. Provide the entry for issuance of the 5% bonds on January 1, 2029. c. Provide the entry to record the extinguishment of the old bonds on January 1, 2029. Note: List multiple debits or credits (when applicable) in alphabetical order. Date Account Name Dr. Cr. a. Jan. 1, 2020 Answer Answer Answer Answer Answer Answer Answer Answer Answer b. Jan. 1, 2029 Answer Answer Answer Answer Answer Answer c. Jan. 1, 2029 Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer Answer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Recording the Refunding of Long-Term Debt
On January 1, 2020, Rocket Corporation issued $100,000 of 6%, 20-year bonds at 98. The interest is payable each December 31. Rocket uses straight-line amortization. The company’s accounting period ends December 31.
On January 1, 2029, Rocket issued $100,000, 5% 20-year, refunding bonds at par. On this date, the old 6% bonds could be purchased in the open market at 102. Rocket immediately purchased all of the 6% bonds.
Required
a. Provide the entry for issuance of the 6% bonds on January 1, 2020.
b. Provide the entry for issuance of the 5% bonds on January 1, 2029.
c. Provide the entry to record the extinguishment of the old bonds on January 1, 2029.
- Note: List multiple debits or credits (when applicable) in alphabetical order.
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| a. | Jan. 1, 2020 | Answer | Answer | Answer |
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| b. | Jan. 1, 2029 | Answer | Answer | Answer |
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| c. | Jan. 1, 2029 | Answer | Answer | Answer |
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