Question

Entries for Issuing and Calling Bonds; Loss Hoover Corp., a wholesaler of music equipment, issued $15,710,000 of 20-year, 10% callable bonds on March 1, 2012, at their face amount, with interest payable on March 1 and September 1. The fiscal year of the company is the calendar year. 2042 Mar. 1 Issued the bonds for cash at their face amount. 2014 Sept. 1 Called the bond issue at 104, the rate provided in the bond Indenture. (Omit entry for payment of interest.) If an amount box does not require an entry, leave it blank. Journalize the entries to record the above selected transactions. Issued the bonds for cash at their face amount. 2012 Mar. 1 Paid the interest on the bonds. 2012 Sept. 1 Called the bond issue at 104, the rate provided in the bond indenture. (Omit entry for payment of interest.) 2014 Sept. 1

Answer 1

Answer-

Date	General Journal	Debit	Credit
20Y2
Mar. 1	Cash	15,710,000
	Bonds payable		15,710,000
	(To record issuance of bonds)
Sept. 1	Interest expense	785,500
	Cash (10% x $15,710,000 x 1/2)		785,500
	(To record interest paid on bonds)
20Y4
Sept. 1	Bonds payable	15,710,000
	Loss on retirement of bonds	628,400
	Cash ($15,710,000 x 104/100)		16,338,400
	(To record retirement of bonds)