Question

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Entries for Issuing and Calling Bonds; Loss Hoover Corp., a wholesaler of music equipment, issued SS 450,000 of 25-year, 10% calable 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 Year 1 cash at their face amount. Sept. 1 Paid the interest on the bonds. Year 3 Sept. 1 Called the bond issue at 103, the rate provided in the bond indenture. (Omit entry for payment of interest.) ournalize the entries to record the above selected transactions Issued the bonds for cash at their face amount Year 1 Mar Paid the interest on the bonds. Year 1 Sept. 1 Called the bond issue at 103, the rate provided in the bond indenture. (Omt entry for payment of interest. ) if an amount box dows not require an entry, lave it blank Year 3 Sept. 1

Answer 1

Year	Date	Account titles and explanation	debit	Credit
Year 1	March 1	Cash	8450000
		Bonds payable		8450000
		(to record the issuance of bonds)
Year 1	Sept. 1	Interest expense	422500
		Cash (8450000*10%*6/12)		422500
		(to record payment of interest)
Year 3	Sept. 1	Bonds payable	8450000
		Loss on redemption of bonds (8450000*3%)	253500
		cash		8703500
		(to record calling off or repayment of the bonds)