Question

Entries for issuing and Calling Bonds; Loss Adele Corp., a wholesaler of music equipment, issued $9,330,000 of 20-year, 14% callable bonds on March 1, 2011, at their face amount, with interest payable on March 1 and September 1. The fiscal year the company is the calendar year 2011 Mar. 1 Issued the bonds for cash at their face amount. Sept. 1 Pald the interest on the bonds. 2015 Called the bond issue at 104, the we provided in the bond indenture, t or payment of interest Journalize the entries to record the above selected transactions S Issued the bonds for cash at their face amount 2011 Max 1 Ped the rest on the bonds Called the bonds 104, the rate provided in the band inde m er for payment of interest.) For a compound transaction an amount box does not an entry leavita

Answer 1

Issued the bonds for cash at their face value amount.

Date	General Journal	Debit	Credit
20Y1 Mar. 1	Cash	9,330,000
	Bonds payable		9,330,000

Paid the interest on the bonds.

Date	General Journal	Debit	Credit
20Y1 Sep. 1	Interest expense	653,100
	Cash		653,100

Semi annual interest expense = 9,330,000 x 14% x 6/12

= $653,100

Called the bond issue

Date	General Journal	Debit	Credit
20Y5 Sep. 1	Bonds payable	9,330,000
	Loss on bonds redemption	373,200
	Cash		9,703,200

Loss on bonds redemption = 9,330,000 x 4%

= $373,200

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