On October 1, 2009, Garden Equipment Corporation issued 1,600 bonds at face valu

Question

On October 1, 2009, Garden Equipment Corporation issued 1,600 bonds at face value. The bond certificates indicate a face value of $1,000, a stated interest rate of 7.8 percent paid annually on September 30, and a September 30, 2020 maturity date.

Prepare the journal entry to record the bond issue on October 1, 2009. (Omit the "$" sign in your response.)

Assume Garden Equipment retires the bond early on October 1, 2012, at a price of 103.4. Prepare the journal entry to record this early retirement. (Omit the "$" sign in your response.)

Prepare the journal entry to record the bond issue on October 1, 2009. (Omit the "$" sign in your response.)

Explanation / Answer

Debit Cash 1,600,000 Credit Bonds Payable 1,600,000 Debit Interest Expense 31,200 Credit Interest Payable 31,200 Debit Bonds Payable 1,600,000 Debit Loss on Bond Retirement 54,400 Credit Cash 1,654,400

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