Three years ago American Insulation Corporation issued 10 percent, $880,000, 10-year bonds for $810,000. American Insulation...
Three years ago American Insulation Corporation issued 10
percent, $880,000, 10-year bonds for $810,000. American Insulation
exercised its call privilege and retired the bonds for $870,000.
The corporation uses the straight-line method to determine
interest.
Required:
Prepare the journal entry to record the call of the bonds. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Homework Answers
|
Account titles and explanation |
Debit |
Credit |
|
Bonds payable (face value) |
880000 |
|
|
Loss on early extinguishment (balancing figure) |
39000 |
|
|
Discount on bonds payable (7/10*(880000-810000)) |
49000 |
|
|
Cash |
870000 |
|
|
(to record the call of the bonds.) |
Add Answer to:
Three years ago American Insulation Corporation issued 10
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