Adele Corp., a wholesaler of music equipment, issued $32,700,000 of 20-year, 6%

Question

Adele Corp., a wholesaler of music equipment, issued $32,700,000 of 20-year, 6% callable bonds on March 1, 2016 at their face amount, with interest payable on March 1 and September 1. The fiscal year of the company is the calern year. danr Jourmalize the entries to reco the folowing selected Journalize the entries to record the following selected transactions. Be sure to include the year in the date for the entries recording the issue and calling of the bonds. Refer to the Chart of Accounts for exact wording of account titles. 2016 Mar. 1 Issued the bonds for cash at their face amount. Sept.1 Paid the interest on the bonds. 2020 Sept.1Called the bond issue at 102, the rate provided in the bond indenture. (Omit entry for payment of interest.)

Explanation / Answer

Mar 1 2016

Cash account debit 32,700,000

To Bonds payable 32,700,000

(For bonds issued at par $32,700,000)

Sep 1 2016

Interest expense account debit (32,700,000 *3%) $981,000

To cash $981,000

( For interest paid on sep 1 2016)

Sep 1 2020

Bonds payab le account debit 32,700,000

Premium account debit 654,000

To cash 33,354,000

( Bons called for $102 each)

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