Question

Entries for Issuing and Calling Bonds; Loss

Adele Corp., a wholesaler of music equipment, issued $16,930,000 of 10-year, 12% callable bonds on March 1, 20Y1, at their face amount, with interest payable on March 1 and September 1. The fiscal year of the company is the calendar year.

20Y1
Mar. 1	Issued the bonds for cash at their face amount.
Sept. 1	Paid the interest on the bonds.
20Y5
Sept. 1	Called the bond issue at 103, the rate provided in the bond indenture. (Omit entry for payment of interest.)

Journalize the entries to record the above selected transactions.

Issued the bonds for cash at their face amount.

20Y1 Mar. 1

Paid the interest on the bonds.

20Y1 Sept. 1

Called the bond issue at 103, the rate provided in the bond indenture. (Omit entry for payment of interest.) For a compound transaction, if an amount box does not require an entry, leave it blank.

20Y5 Sept. 1

Answer 1

20Y1 Mar. 1	Cash	16930000
	Bonds payable		16930000
20Y1 Sept. 1	Interest expense	1015800		=16930000*12%*6/12
	Cash		1015800
20Y5 Sept. 1	Bonds payable	16930000
	Loss on bond redemption	507900
	Cash		17437900	=16930000*1.03