Question

PB10-5 (Algo) Recording and Explaining the Early Retirement of Debt (LO 10-3]
QPF Movie Group, owns and operates movie theaters worldwide. Assume the company issued 5 percent bonds at their $53,500,000
face value and then used all of these cash proceeds to retire bonds with a stated interest rate of 7 percent At that time, the 7 percent
bonds had a carrying value of $50,000,000
Required:
17
1. Prepare the journal entries to record the issuance of the 5 percent bonds and the early retirement of the 7 percent bonds. Assume
both sets of bonds were issued at face value
2. Where should QPF report any gain or loss on this transaction?
3. What dollar amount of interest expense is QPF saving each year by replacing the 7 percent bonds with the 5 percent bonds?

Answer 1

Answer:

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Explanation:

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Answer 2

Answer:

PB10-5 (Algo) Recording and Explaining the Early Retirement of Debt (LO 10-3]

QPF Movie Group, owns and operates movie theaters worldwide. Assume the company issued 5 percent bonds at their $53,500,000

face value and then used all of these cash proceeds to retire bonds with a stated interest rate of 7 percent At that time, the 7 percent

bonds had a carrying value of $50,000,000

Required:

17

1. Prepare the journal entries to record the issuance of the 5 percent bonds and the early retirement of the 7 percent bonds. Assume

both sets of bonds were issued at face value

2. Where should QPF report any gain or loss on this transaction?

3. What dollar amount of interest expense is QPF saving each year by replacing the 7 percent bonds with the 5 percent bonds?