Homework Answers
| No. | Date | Account Titles and Explanation | Debit | Credit | |
| a | June 30,2021 | Bonds payable | 720000 | ||
| Loss on redemption of bonds | 29520 | ||||
| Discount on Bonds payable | 7920 | ||||
| Cash | 741600 | =720000*1.03 | |||
| (To record the redemption of the old issue) | |||||
| June 30,2021 | Cash | 969600 | =960000*1.01 | ||
| Premium on Bonds payable | 9600 | ||||
| Bonds payable | 960000 | ||||
| (To record the sale of the new issue) | |||||
| b | December 31,2021 | Interest expense | 47760 | ||
| Premium on Bonds payable | 240 | =9600/20*6/12 | |||
| Cash | 48000 | =960000*10%*6/12 |
| Workings: | ||
| Discount on bond issue | 14400 | =720000*(1-0.98) |
| Discount amortized for 9 years | 6480 | =14400*9/20 |
| Unamortized discount | 7920 | =14400-6480 |
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