Question

Hoover Corp., a wholesaler of music equipment, issued $32,700,000 of 20-year, 6% callable bonds on March 1, 20Y2, 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.

20Y2
Mar.	1	Issued the bonds for cash at their face amount.
Sept.	1	Paid the interest on the bonds.
20Y4
Sept.	1	Called the bond issue at 102, the rate provided in the bond indenture. (Omit entry for payment of interest.)

CHART OF ACCOUNTS
Hoover Corp.
General Ledger
ASSETS 110 Cash 111 Petty Cash 121 Accounts Receivable 122 Allowance for Doubtful Accounts 126 Interest Receivable 127 Notes Receivable 131 Merchandise Inventory 141 Office Supplies 142 Store Supplies 151 Prepaid Insurance 191 Land 192 Store Equipment 193 Accumulated Depreciation-Store Equipment 194 Office Equipment 195 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 221 Salaries Payable 231 Sales Tax Payable 232 Interest Payable 241 Notes Payable 251 Bonds Payable 252 Discount on Bonds Payable 253 Premium on Bonds Payable EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends	REVENUE 410 Sales 610 Interest Revenue 611 Gain on Redemption of Bonds

Answer 1

Date		Debit	Credit	Assets	Liabilities	Equity
Mar 1 20Y2	Cash	32700000		↑
	Bonds Payable		32700000		↑
Sept 1 20Y2	Interest expense	981000				↓
	Cash		981000	↓
Sept 1 20Y4	Bonds Payable	32700000			↓
	Loss on Redemption of Bonds	654000				↓
	Cash		33354000	↓