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12 July, 08:53

Adele Corp., a wholesaler of music equipment, issued $32,700,000 of 20-year, 6% callable bonds on March 1, 20Y1, 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. Refer to the Chart of Accounts for exact wording of account titles.

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  1. 12 July, 12:10
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    20Y1

    Mar 1

    Dr Cash 32,700,000

    Cr Bonds payable 32,700,000

    Sept 1

    Dr Interest expense 981,000

    Cr Cash 981,000

    20Y2

    Sept 1

    Dr Bonds payable $32,700,000

    Cr Loss on Redemption of Bonds 654000

    Cr Cash 33,354,000

    Explanation:

    Adele Corp. Journal entries

    20Y1

    Mar 1

    Dr Cash 32,700,000

    Cr Bonds payable 32,700,000

    Sept 1

    Dr Interest expense 981,000 ($32,700,000*6%/2)

    Cr Cash 981,000

    20Y2

    Sept 1

    Dr Bonds payable $32,700,000

    Cr Loss on Redemption of Bonds 654,000

    Cr Cash 33,354,000 ($32,700,000*1.02)
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