Verizon 2:44 PM *99%- CengageNOWv2 1 Online teaching and learning resource from

Question

Verizon 2:44 PM *99%- CengageNOWv2 1 Online teaching and learning resource from Cengage Learni.. Cengage Learning Chapter 11 Homework Entries for Issuing and Calling Bonds; Loss Hoover Corp., a wholesaler of music equipment, issued $30,000,000 of 20-year, 896 callable bonds on March 1, Year 1, at their face amount, with nterest 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, Issued the bonds for cash at their face amount. Sept. Paid the interest on the bonds. Year 3 Sept. 1 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 ,000,00 Bonds Payable 0,000 Feedback Check My Work Correct Paid the interest on the bonds. ear 1 Sept. 1 Interest Expense1,200,000V Cash 1,200,0 Correct compound transaction, if an amount Called the bond issue at 101.5, the rate provided in the bond indenture. (Omit entry for payment of interest.) For box does not require an entry, leave it blank Bonds Payable Loss on Redemption of Bonds Cash Year 3 Sept. 1

Explanation / Answer

CALCULATION OF THE BONDS PREMIUM PAYABLE ON REDEMPTION Bonds Value =               3,00,00,000 Premium payable on redumotion =$ 30,000,000 * 1.5/100)                 4,50,000.0 Total Amount payable =           3,04,50,000.0 Journal Entries Sr. No. Date Account Title and explanation Debit Credit 1 Year 3 , Sept 1 Bonds Payable $3,00,00,000 Loss on Redemption of Bonds $4,50,000         To Cash $3,04,50,000 (To record the redemption of the bonds at premium)

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