Entries for Issuing and Calling Bonds; Loss Hoover Corp., a wholesaler of music

Question

Entries for Issuing and Calling Bonds; Loss Hoover Corp., a wholesaler of music equipment, issued $30,000,000 of 20-year, 8% callable bonds on March 1, Year 1, at their face amount, with interest payable on March 1 and September 1. The fiscal year of the company is the calendar year ournalize the entries to record the following selected transactions Year 1 Mar. 1 Sept. 1 Year 3 Sept. 1 Issued the bonds for cash at their face amount. Paid the interest on the bonds. Called the bond issue at 101.5, the rate provided in the bond indenture. (Omit entry for payment of interest.) Issued the bonds for cash at their face amount. Year 1 Mar. 1 Cash 0,000,000 Bonds Payable 0,000,000 V Feedback Check My Work Correct Paid the interest on the bonds. Year 1 Sept 1 Interest Expense 1200,000 Cash ,200,000 Feedback Check My Work Correct Called the bond issue at 101.5, the rate provided in the bond indenture. (Omit entry for payment of interest.) For a compound transaction, if an amount box does not require an entry, leave it blank. Year 3 Sept. 1 Bonds Payable 30,000,000 Loss on Redemption of Bonds Cash

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Year 3 sep 1 Bonds payable 30000000 Loss on redemption of bonds 450000 Cash a/c (30000000*101.5/100) 30450000

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