Dillip Corp.. a wholesaler of office equipment, issued $45,000,000 of 10-year, 1

Question

Dillip Corp.. a wholesaler of office equipment, issued $45,000,000 of 10-year, 10% callable bonds on March 1, 2012, 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: 2012 Mar. 1. Issued the bonds for cash at their face amount. Sept. 1. Paid the interest on the bonds. 2016 Sept. 1. Called the bond issue at 103, the rate provided in the bond indenture. (Omit entry for payment of interest .)

Explanation / Answer

March 1 Cash DEBIT 45,000,000 Bonds payable CREDIT 45,000,000 Sept. 1 Interest Expense DEBIT 2,250,000 (45,000,000*.1*6/12) Cash CREDIT 2,250,000 Sept. 1 (2016) Bonds payable DEBIT 45,000,000 Loss on redemption of bonds DEBIT 1,350,000 Cash CREDIT 46,350,000 (45,000,000 * 1.03) Hope this helps!

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