17) Describe bond refunding and explain why it might be advantageous for a company.

Using the following accounts:

[1]Cash

[2]Sinking fund

[3]Equipment

[4]Building

[5]Land

[6]Accounts payable

[7]Notes payable

[8]Bond payable

[9]Bond interest expense payable

[10]Premium on bonds payable

[11]Discount on bonds payable

[12]Common stock

[13]Retained earnings

[14]Sinking fund earned

[15]Bond interest expense

[16]Gain on retirement

[17]Loss on retirement

 

Indicate the account(s) to be debited and credited to record the following transactions.

 

18) Paid the bond holders the amount due, face value plus accrued interest, using the sinking fund.

 

Debit ________ & ________ & ________ Credit ________ & ________ & ________

 

19) Retired bonds plus interest previously accrued when the retirement value was above the cost of retirement, cash was paid.

 

Debit ________ & ________ & ________ Credit ________ & ________ & ________

 

20) Retired bonds plus interest previously accrued when the retirement value was beneath the cost of retirement, cash was paid.

 

Debit ________ & ________ & ________ Credit ________ & ________ & ________

21) Issued bonds at face value in exchange for buildings and land.

 

Debit ________ & ________ & ________ Credit ________ & ________ & ________

 

22) Issued bonds at a value above face value in exchange for equipment.

 

Debit ________ & ________ & ________ Credit ________ & ________ & ________

 

23) Sold bonds at a discount.

 

Debit ________ & ________ & ________ Credit ________ & ________ & ________

 

24) Deposited cash in a bond sinking fund.

 

Debit ________ & ________ & ________ Credit ________ & ________ & ________

 

25) Recorded the interest earned on the bond sinking fund.

 

Debit ________ & ________ & ________ Credit ________ & ________ & ________

26) Accrued interest on bonds which sold at face value.

 

Debit ________ & ________ & ________ Credit ________ & ________ & ________

 

 

27) Accrued interest on bonds which sold beneath face value.

 

Debit ________ & ________ & ________ Credit ________ & ________ & ________

 

28) Accrued interest on bonds which sold above face value.

 

Debit ________ & ________ & ________ Credit ________ & ________ & ________

 

 

 



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