Part 3: Long Questions (Total points: 50 points) Long Question 1 Suggested Time: 20 minutes (Total points: 20 points) Note: You must show ALL work to receive full (or partial) credit. On July 1, 2018, Remington Chemical Company issued $40,000 face value, 12%, $5,405. The prevailing rate on the market is 16%. Remington uses the effective-interest method to amortize bond premium or discount. The bonds pay semi-annual interest on van January 1. ALL INTEREST RATES ARE ANNUAL. Instructions (Round all computations to the nearest dollar.) Part (A): Prepare the journal entries to record the following transactions. (1) The issuance of the bonds on July 1, 2018. (4 points) Write journal entry here: Clearly show work below. Part (B: Required: Determine the total cost of borrowing over the nte o Clearly show work below. Tal cost of borrowing over the life of the bond. (4 points) Part (C: Suppose the bond is redeemed before maturity after the 2nd semiannual interest period and the company uses effective rate amortization. If the company retires the bond at 99, what is the gain or loss recognized on redemption? What is the journal entry the company records for this transaction? (6 points) Write journal entry here: Clearly show work below. 000.21 012 d e 000012 los bebas ban D ose de 0,32 (2) The payment of interest and the amortization of the premium or discount on July 1 assuming no accrual of interest on June 30, 2019. (6 points) YOU MUST SHOW ALL OF YOUR CALCULATIONS TO RECEIVE FULL POINTS. Write journal entry here: Clearly show work below.

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