Question

Hoover Corp., a wholesaler of music equipment, issued $29,700,000 of 20-year, 6% callable bonds on March 1, Year 1, at their face amount, with interest payable on March 1 and September 1. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions. Refer to the Chart of Accounts for exact wording of account titles. Year 1 Mar. 1 Issued the bonds for cash at their face amount. 1 Paid the interest on the bonds. Sept. Year 3 Sept. Journal 1 Called the bond issue at 101, the rate provided in the bond indenture. (Omit entry for payment of interest.) Loss on Reder Cash

Answer 1

In the books of Hoover Corp:

Date	Account Titles	Debit	Credit
		$	$
Mar 1, Year 1	Cash	29,700,000
	Bonds Payable		29,700,000
Sep 1, Year 1	Interest Expense	891,000
	Cash		891,000
Sep 1, Year 3	Bonds Payable	29,700,000
	Loss on Redemption of Bonds	297,000
	Cash ( 29,700,000 x 101 % )		29,997,000