question archive On February 1, 2018, GMSS Perfection Ltd issued 9% bonds, dated February 1, with a principal amount of $80 million
On February 1, 2018, GMSS Perfection Ltd issued 9% bonds, dated February 1, with a principal amount of $80 million
Subject:AccountingPrice: Bought3
On February 1, 2018, GMSS Perfection Ltd issued 9% bonds, dated February 1, with a principal amount of $80 million. The bonds mature on January 31, 2022 (4 years). The market yield for bonds of similar risk and maturity was 10%. Interest is paid semiannually on July 31 and January 31. ROCC Industries acquired $80,000 of the bonds as a long-term investment. The fiscal years of both firms end December 31. 3. Prepare the journal entries to record (a) the issuance of the bonds by GMSS and (b) ROCC's investment on bonds on February 1, 2018. (12 marks) 4. Prepare the journal entries by GMSS to record the interest payments on July 31, 2018 and Jan 31, 2019 and the necessary year-end adjustment on Dec 31, 2018. (20 marks) Total: 57 marks
