Question

Journal Entrys


Hoover Corp., a wholesaler of music equipment, issued $20,000,000 of 20-year, 6% callable bonds on March 1, 20Y2, at their face amount, with interest payable on March 1 and September 1. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions. Refer to the Chart of Accounts for exact wording of account titles. 20Y2 Mar. 1 Issued the bonds for cash at their face amount. Sept. 1 Paid the interest on the bonds. 2014 Sept. 1 Called the bond issue at 102, the rate provided in the bond indenture. (Omit entry for payment of interest.)

Answer 1

Date	Accounts and explanation	Debit(in $)	Credit(in $)
Mar 1,20Y2	Cash	2,00,00,000
	Bonds Payable		2,00,00,000
Sept 1,20Y2	Interest expenses($20,000,000*6%*6/12)	6,00,000
	Cash($20,000,000*6%*6/12)		6,00,000
Sept 1,20Y4	Bonds Payable	2,00,00,000
	Loss on Bond called back	4,00,000
	Cash		2,04,00,000
Date	Accounts and explanation	Debit(in $)	Credit(in $)
May 1,20Y5	Cash	2,20,00,000
	Bonds Payable		2,20,00,000
Nov 1,20Y2	Interest expenses($22,000,000*4%*6/12)	4,40,000
	Cash($20,000,000*6%*6/12)		4,40,000
Nov 1,20Y4	Bonds Payable	2,20,00,000
	Cash		2,13,40,000
	Gain on Bond called back		6,60,000