the second interest payment. January 31, 2034 the date the principal is repaid. What would be the entry to record the issuance of the bonds if they are not issued until March 1 (that is, between interest dates)? Under the original assumption that the bonds are issued February 1, 2024 How much would it cost Lok to pay off the bonds early (by repurchasing them from the open market) on August 1, 2030 if the market interest rate on that date is 6% ? Give the journal entry that would be required to account for the early repayment, and comment on the interpretation of any gain or loss that would be recorded. If Lok had to pay $3,000 in legal, accounting, and registration fees in connection with the issuance of the bonds, explain how Lok would account for those costs on the date of issue

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Lok issued 8%, 80, 000 bonds on February 1, 2024. The bonds pay interest each July 31 and January 31 and were issued to yield 7% to investors. The bonds
mature on January 31, 2034. Compute the amount of cash Lok will receive when it issues these bonds. Prepare an amortization schedule that shows how the
discount or premium on the bonds will be amortized over their term. Prepare journal entries required on the following dates: February 1, 2024 issuance of the
bonds. July 31, 2024 date of the first interest payment. December 31, 2024 accrual of interest through the end of the fiscal year. January 31, 2025 - date of
the second interest payment. January 31, 2034 the date the principal is repaid. What would be the entry to record the issuance of the bonds if they are not
issued until March 1 (that is, between interest dates)? Under the original assumption that the bonds are issued February 1, 2024 How much would it cost
Lok to pay off the bonds early (by repurchasing them from the open market) on August 1, 2030 if the market interest rate on that date is 6% ? Give the journal
entry that would be required to account for the early repayment, and comment on the interpretation of any gain or loss that would be recorded. If Lok had to
pay $3,000 in legal, accounting, and registration fees in connection with the issuance of the bonds, explain how Lok would account for those costs on the date of
issue
Transcribed Image Text:Lok issued 8%, 80, 000 bonds on February 1, 2024. The bonds pay interest each July 31 and January 31 and were issued to yield 7% to investors. The bonds mature on January 31, 2034. Compute the amount of cash Lok will receive when it issues these bonds. Prepare an amortization schedule that shows how the discount or premium on the bonds will be amortized over their term. Prepare journal entries required on the following dates: February 1, 2024 issuance of the bonds. July 31, 2024 date of the first interest payment. December 31, 2024 accrual of interest through the end of the fiscal year. January 31, 2025 - date of the second interest payment. January 31, 2034 the date the principal is repaid. What would be the entry to record the issuance of the bonds if they are not issued until March 1 (that is, between interest dates)? Under the original assumption that the bonds are issued February 1, 2024 How much would it cost Lok to pay off the bonds early (by repurchasing them from the open market) on August 1, 2030 if the market interest rate on that date is 6% ? Give the journal entry that would be required to account for the early repayment, and comment on the interpretation of any gain or loss that would be recorded. If Lok had to pay $3,000 in legal, accounting, and registration fees in connection with the issuance of the bonds, explain how Lok would account for those costs on the date of issue
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