You skipped this question in the previous attempt Problem 14-15 Early extinguish

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You skipped this question in the previous attempt Problem 14-15 Early extinguishment, effective interest [L014-5] The long-term liability section of Twin Digital Corporation's balance sheet as of December 31, 2017 included 12% bonds having a face amount of $15 million and a remaining discount of $1 million. Disclosure notes indicate the bonds were issued to yield 14%. Interest expense is recorded at the effective interest rate and paid on January 1 and July 1 of each year. On July 1, 2018, Twin Digital retired the bonds at 104 (15.6 million) before their scheduled maturity. Required: 1. & 2. Prepare the necessary journal entries for Twin Digital on July 1, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollar.) View transaction list ences Journal entry worksheet Record the semiannual interest. Note: Enter debits before credits lit Juily 01,2018 O Type here to search 18

Explanation / Answer

Interest Expense

[($15,000,000 -1,000,000)* 14 %*6 /12]

Discount on bonds payable

[balancing .fig]

Cash

[$15,000,000 * 12 % * 6 /12]

Loss on retirement of bonds

[balancing .fig]

Discount on bonds payable

($1,000,000 - $80,000)

Cash

Sl. No Date General Journal Debit ($) Credit ($) 1 July 01 ,2018

Interest Expense

[($15,000,000 -1,000,000)* 14 %*6 /12]

980,000

Discount on bonds payable

[balancing .fig]

80,000

Cash

[$15,000,000 * 12 % * 6 /12]

900,000 (To record semi annual interest) 2 July 01 ,2018 Bonds payable 15,000,000

Loss on retirement of bonds

[balancing .fig]

1,520,000

Discount on bonds payable

($1,000,000 - $80,000)

920,000

Cash

15,600,000 (To record the redemption of bonds)

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