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Re: Need help,about a Accounting problem about Partial amortization.
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Re: Need help,about a Accounting problem about Partial amortization.# Business - 商学院
a*e
1
No.The extinguished Bonds payable is just 50% of the original Bonds Payable.
So the new Bonds Pable is 2500000( the biginning Bonds Payable is
5,000,000).In fact, the Journal Entries for the extinguishment of 50% of the
Bonds payable is: Bonds Payable 2500000
Loss on Bond Extingu 58,519
Interest Payable 100,000
Bond Discount 41,481
Cash 2700000
Can you figure it out now? I am very confused about such numbers. Appreciate
you
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q*i
2
here is my take (no accounting major).
annual interest is 4911034*8.39%=412009 (actually 412036 but it is
close enough). Bonds usually pay bi-annually, so each quarter,
accrual is 412009/4=103002.
part of 103002, however, reflects OID (12009/4=3002) - this is likely
the part that wasn't clear.
so the cash portion of the interest is 103002-3002=100000, which
is accrued on the book during the quarter when the payment is NOT made.
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q*i
3

so the discount + interest payment makes up to the 8.39% yield.
25% is so the company is accruing the interests / oid on a quarterly basis,
even if they are not paying out the interest.
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