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 for cash at their face amount.
Sept 1 Paid the intrest 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)

Journalize the following
Paid the interest on the bonds.

Explanation / Answer

Hi, Please find journal entries as below: Mar 1 Cash Dr. 45,000,000 Bonds Payable Cr. 45,000,000 Sept 1 Interest expense Dr. (45,000,000 x 10% x 6/12) 2250000 Cash Cr. 2250000 Sept 1 2016 Bonds payable Dr. 45000000 Loss on Redemption of Bonds Dr. (46350000 - 45000000) 1350000 Cash Cr. (45000000 X 1.03) 46350000 Thanks, Aman

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