Dennis Corp. issued $2,500,000 of 20-year, 9% callable bonds on July 1, 2007, wi

Question

Dennis Corp. issued $2,500,000 of 20-year, 9% callable bonds on July 1, 2007, with interest payable on June 30 and December 31. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions:

For a compound transaction, if an amount box does not require an entry, leave it blank or enter "0".

2007 July 1

  

  

  

  

2007 Dec. 31

  

  

  

  

2011 Dec. 31

  

  

  

  

  

  

  

  

  

2007 July 1

  

  

  

  

2007 Dec. 31

  

  

  

  

2011 Dec. 31

  

  

  

  

  

  

  

  

  

Explanation / Answer

Ans;

2007
July 1 Issued the bonds for cash at their face amount.
Dr Cash 2,500,000
Cr Bonds Payable 2,500,000

Dec. 31 Paid the interest on the bonds.
Dr Interest Expense 112,500 (2,500,000 x 9% x 6/12)
Cr Cash 112,500

2011
Dec. 31 Called the bond issue at 97, the rate provided in the bond indenture. (Omit entry for payment of interest.)
Dr Bonds Payable 2,500,000
Cr Cash 2,425,000 (2,500,000 x 97%)
Cr Gain on Bonds Redeemed 75,000

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.