Long Term Liabilities 1

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Part 1 On January 1, 2017, Swifty Corporation redeemed $620,000 of bonds at 97. At the time of redemption, the unamortized premium was $18,600.

Prepare the corporation’s journal entry to record the reacquisition of the bonds. (If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.)

Part 2

Martinez Co. is building a new hockey arena at a cost of $2,360,000. It received a downpayment of $500,000 from local businesses to support the project, and now needs to borrow $1,860,000 to complete the project. It therefore decides to issue $1,860,000 of 10%, 10-year bonds. These bonds were issued on January 1, 2016, and pay interest annually on each January 1. The bonds yield 9%.

Prepare the journal entry to record the issuance of the bonds on January 1, 2016. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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