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Instructions Hill Corporation issued $1,200,000 of 7% bonds at 99 on January 2, 2019. Interest is paid semiannually on June 3
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Issue price of bond $1,188,000 1200000*99%
Discount on bond issue $12,000 1200000-1188000
Discount amortized each semi-annually 12000/20
Discount amortized each semi-annually $600
Discount amortized till 31st Dec 2021 $3,600 3*600*2
Discount amortized on 31st March 2022 $300 600*(3/6)
Total discount amortized $3,900
Discount on bonds payable balance (31.03.2022) $8,100 12000-3900
Calculate recall price
Call price (1200000*108%) $1,296,000
Add: Accrued interest (1200000*7%*3/12) $21,000
Reacquisition price $1,317,000
Less: Book value of bond (1200000-8100) $1,191,900
Loss on redemption $125,100
Record journal entry for bond reacquired
General Journal Debit Credit
Bonds payable $1,200,000
Loss on redemption of bond $125,100
   Discount on bonds payable $8,100
   Cash $1,317,000
(To record reacquisition of bonds)
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