On January 1, 2000, Vick Company issued $500,000 of 8%, 15 year bonds, at a price...

On January 1, 2000, Vick Company issued $500,000 of 8%, 15 year bonds, at a price of 94. The bonds pay

semiannual interest on June 30 and December 31 of each year. Vick records the interest payments every six months by amortizing the discount on bonds payable using the straight-line method. On Januray 1, 2005 Vick Company retires 30% of these bonds by buying them on the open market at a price of 97.

How does the market rate compare to the stated rate (market rate higher or lower)?

Journalize the issuance on 1/1/05

Journalize the first interest payment on June 30.

Journalize the retirement on January 1, 2005

Expert Solution

Answer is given below with working notes

ekkarill92 answered 2 years ago

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