Entries for Issuing and Calling Bonds; Loss Hoover Corp., a wholesaler of music equipment, issued $9,000,000 of 25-year, 10% 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. 20Y2 Mar. 1 Issued the bonds for cash at their face amount. Sept. 1 Paid the interest on the bonds. 20Y4 Sept. 1 Called the bond issue at 102, the rate provided in the bond indenture. (Omit entry for payment of interest.) If an amount box does not require an entry, leave it blank. Journalize the entries to record the above selected transactions. Issued the bonds for cash at their face amount. 20Y2 Mar. 1 Paid the interest on the bonds. 20Y2 Sept. 1 Called the bond issue at 102, the rate provided in the bond indenture. (Omit entry for payment of interest.) 20Y4 Sept. 1

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Carlo Warner

Business

31 January, 04:02

Entries for Issuing and Calling Bonds; Loss Hoover Corp., a wholesaler of music equipment, issued $9,000,000 of 25-year, 10% 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. 20Y2 Mar. 1 Issued the bonds for cash at their face amount. Sept. 1 Paid the interest on the bonds. 20Y4 Sept. 1 Called the bond issue at 102, the rate provided in the bond indenture. (Omit entry for payment of interest.) If an amount box does not require an entry, leave it blank. Journalize the entries to record the above selected transactions. Issued the bonds for cash at their face amount. 20Y2 Mar. 1 Paid the interest on the bonds. 20Y2 Sept. 1 Called the bond issue at 102, the rate provided in the bond indenture. (Omit entry for payment of interest.) 20Y4 Sept. 1

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Talan Mckee · Answer 1

Answer and Explanation:

The journal entries are shown below:

On March 1

Cash or bank Dr $9,000,000

To Bond payable $9,000,000

(being the issuance of the bond for cash is recorded)

On Sep 1

Interest expense $450,000

To Cash $450,000

(Being the interest expense for cash is paid)

The computation is shown below:

= $9,000,000 * 10% * 6 months : 12 months

= $450,000

On Sep 1

Bond payable $9,000,000

Loss on redemption of bond $180,000 (Balancing figure)

To Cash $9,180,000

(Being the bond issuance is recorded)