Exercise 14-13 Cheyenne, Inc. had outstanding $6,420,000 of 11% bonds interest p

Question

Exercise 14-13 Cheyenne, Inc. had outstanding $6,420,000 of 11% bonds interest payable July 31 and January 31 due in 10 years. On July 1 it issued $8,590,000 of 11%, 15-year bonds interest payable July 1 and January 1) at 99, A portion of the proceeds was used to call the 11% bonds (with unamortized discount of $192,600) at 103 on August 1. Prepare the journal entries necessary to record issue of the new bonds and the refunding of the bonds. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation uly 1 Debit Credit (To record issuance of 11% bonds) August 1 (To record retirement of 11% bonds)

Explanation / Answer

1-Jul Cash 8504100 =8590000*0.99 Discount on bonds payable 85900       Bonds payable 8590000 1-Aug Bonds payable 6420000 Loss on retirement of bonds 385200        Discount on bonds payable 192600        Cash 6612600 =6420000*1.03

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