Windell issued callable bonds on January 1, 2018. The company accountant has pro

Question

Windell issued callable bonds on January 1, 2018. The company accountant has provided the partial amortization C. schedule shown below: Date Cash Paid Interest Expense Amortization Carying Value Jan. 1, 2018 S 612,765 615.403 618,173 621,082 624.136 e June 30, 2018 28,000 S30,638 $ Dec. 31,2018 June 30, 2019 Dec. 31, 2019 28,000 28,000 28,000 30,770 30,909 31,054 2,638 2.770 2,909 ,054 72 73 74 After the interest payment on December 31, 2019, Windell calls the bonds and immediately retires them. Face value of the bonds S 700,000 104% 76 The bonds were called at 78 Required:On December 31, 2019, prepare the entries to record the 79 a. Payment of interest b. Redemption of the bonds. 81

Explanation / Answer

Journal entry :

Date accounts & explanation debit credit Dec 31, 2019 Interest expense 31054 Discount on bonds payable 3054 Cash 28000 (To record interest expense) Dec 31,2019 Bonds payable 700000 Loss on redemption of bonds 103864 Discount on bonds payable 75864 Cash (700000*104%) 728000 (To record redemption of bonds)

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