Question

Entries for issuing and calling bonds; gain Instructions Chart of Accounts Journal Instructions Mia Breen Corp. produces and sells wind-energy-driven engines. To finance its operations, Mia Breen issued $32,700,000 of 20-year, 6% callable bonds on May 1, Year 1, at their face amount, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions. Refer to the Chart of Accounts for exact wording of account titles. Year 1 May 1 Issued the bonds for cash at their face amount. Nov. 1 Paid the interest on the bonds. Year 5 Nov. Called the bond issue at 96, the rate provided in the bond indenture. (Omit entry for payment of interest.)

Answer 1

Date	Description	Debit	Credit	Assets	Liabilities	Equity
May 1	Cash	32700000		↑
	Bonds payable		32700000		↑
Nov 1	Interest expense	981000				↓
	Cash		981000	↓
Date	Description	Debit	Credit	Assets	Liabilities	Equity
Nov 1	Bonds payable	32700000			↓
	Cash		31392000	↓
	Gain on redemption of bonds		1308000			↑