Question

Juestion 6 Missouri Wheels Ltd. (MW) sold $9,000,000 of fourteen vear, 3% bonds at par on January Interest is payable on June 30 and December 31 each wear. The bonds can be called at any time plus accrued interest. On April 1, 2021, MW bought back $3.500.000 of bonds on the open market for $2,600,000 including accrued interest and retired them. On August 1, 2022, MW called $4,500,000 of bonds and retired them. MW prepares accrual entries only at year-end. Prepare journal entries to record: a. The open market purchase of the bonds on April 1, 2021. b. The calling of the bonds on August 1, 2022. c. Retirement of the remaining bonds on December 31, 2030, assuming that the final interest payment has already been recorded in the company's books. Date Explanation/Account Debit Credit
prepre journal entries to record a b and c

Answer 1

DATE TUIN solution to go (@) Open mascket purchase on 14|2021 3.7. Bonds AC or 2578750 Interest AIC or 26250 - To bank All 2600000 (being bondo purchased in open market). 1/4/2021 3bonds Alc or 926250 - To profit on 926250 'Cancellationale ( Being profit gained on occasion of Cancellation). (b) 41812021 1182021 3.1. bonds Afc or 4635ooo neust on bonds All Dr 78750 TO Bank Al UA13750 (being bonds called in market). con on cancellahon Q bonds Alcor 135 000 - To 3.l. bonds All 13500. Cleeing dono incurred on occassion of - calling up of bonds). C) 31/12/2030 34. bonds of Dr 1030000 To bank Alc 1030 000 I being on scotisement balance bonds are Called up) lo low on cancellation All Dr 300000 on can To 30%. Bonds All 300 m cbeing lono incurred on retirement el bonds). 31/12/230 V