Entries for Bonds Payable

question 81

Essay

Entries for bonds payable
Prepare journal entries to record the following transactions relating to long-term bonds of Lancaster Inc. Show calculations and round to the nearest dollar.
a) On June 1, 2020, Lancaster Inc. issued $ 400,000, 6% bonds for $ 391,760, including accrued interest. The bonds were dated February 1, 2020, and interest is payable semi-annually on February 1 and August 1 with the bonds maturing on February 1, 2030. The bonds are callable at 102.
b) On August 1, 2020, Lancaster paid the semi-annual interest and recorded the amortization of the discount or premium, using straight-line amortization.
c) On February 1, 2022, Lancaster paid the semi-annual interest and recorded amortization of the discount or premium. Assume that a reversing entry was made on January 1, 2022.
d) The company then purchased $ 240,000 of the bonds at the call price.

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Definitions:

Recognition Strike

A type of strike aiming to compel an employer to recognize and negotiate with the union as the official collective bargaining agent for the workers.

Sympathy Strike

A work stoppage by workers in one industry intended to show support for striking workers in a different industry or company.

NLRA

A key piece of legislation in US labor law, the National Labor Relations Act establishes the rights of workers to unionize and negotiate collectively with their employers.

Mandatory

Refers to something required or obligatory by law or rule.