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Unformatted text preview: ACCT 401L Lab Assignment #11 Long-term Liabilities Name____________________ Date 4/15/11 Problem 1: On January 1, 2011, Pineapple Enterprises issued 12% bonds dated January 1, 2011, with a face amount of $20 million. The bonds mature in 2020 (10 years). For bonds of similar risk and maturity, the market yield is 10%. Interest is paid semiannually on June 30 and December 31. Required: 1) Determine the price of the bonds at January 1, 2011. 2) Prepare the journal entry to record the bond issuance by Pineapple on January 1, 2011. 3) Prepare the journal entry to record interest on June 30, 2011, using the effective interest method. 4) Prepare the journal entry to record interest on December 31, 2011, using the effective interest method. Problem 2: Strawberry Corp. owes $270,000 to Kiwi Trust. The debt is a 10-year, 12% note due December 31, 2010. Because Strawberry Corp. is in financial trouble, Kiwi Trust agrees to extend the maturity date to December 31, 2012, reduce the principal to $220,000, and reduce the interest...
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This note was uploaded on 02/22/2012 for the course ACCT 401 taught by Professor Winchel during the Spring '10 term at South Carolina.
- Spring '10