Retiring bonds payable [15-20 min]
Virtuoso Transportation issued $400,000 of 7% bonds payable at 90 on October 1, 2012. These bonds are callable at 100 and mature on October 1, 2020. Virtuoso pays interest each April 1 and October 1. On October 1, 2017, when the bonds’ market price is 97, Virtuoso retires the bonds in the most economical way available.
Requirement
1. Record the payment of the interest and amortization of bond discount at October 1, 2017, and the retirement of the bonds on that date. Virtuoso uses the straight-line amortization method.
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