Adele Corp., a wholesaler of music equipment, issued $29,700,000 of 20-year, 6%

Question

Adele Corp., a wholesaler of music equipment, issued $29,700,000 of 20-year, 6% callable bonds on March 1, 2016 at their face amount, with interest payable on March 1 and September 1. The fiscal year of the company is the calendar year.

Journalize the entries to record the following selected transactions. Be sure to include the year in the date for the entries recording the issue and calling of the bonds. Refer to the Chart of Accounts for exact wording of account titles.

Journalize the entries to record the transactions. Be sure to include the year in the date for the entries recording the issue and calling of the bonds. Refer to the Chart of Accounts for exact wording of account titles.

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JOURNAL

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2016 Mar. 1 Issued the bonds for cash at their face amount. Sept. 1 Paid the interest on the bonds. 2020 Sept. 1 Called the bond issue at 101, the rate provided in the bond indenture. (Omit entry for payment of interest.)

Explanation / Answer

journal entries Date Accounting titles & Explanations Debit Credit 1-Mar Cash 29,700,000 Bonds payable 29,700,000 1-Sep interest expense 891000 cash 891,000 (29,700,000*6%*1/2) 2020 1-Sep bonds payable 29,700,000 loss on redemption 297,000 Cash (29,700,000*1.01) 29997000

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