ler of music equipment, issued $19,600,000 of 20-year, 7% callable bonds on Marc

Question

ler of music equipment, issued $19,600,000 of 20-year, 7% callable bonds on March 1, 20Y1, at their face amount, with interest payable on is the calendar year. Journalize the entries to record the following selected transactions. Refer to the Chart of Accounts for exact wordling of account titles 20Y1 Mar. Sept. 20YS Sept. 1 1ssued the bonds for cash at their face amount. 1 Paid the interest on the bonds. Called the bond issue at 105, the rate provided in the bond indenture. (Omit entry for payment of interest.) 1

Explanation / Answer

Journal Entry Sr No Date Particular LF Debit Amount Credit Amount March 20Y1 Cash a/c     Dr $ 19,600,000 To Bonds a/c $ 19,600,000 Sept 20Y1 Interest exp a/c     Dr $        686,000 To Cash a/c $        686,000 Sept 20Y5 Bond exp a/c     Dr $ 19,600,000 Premium payable on bond redumption a/c     Dr $        980,000    To Cash a/c $ 20,580,000

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