Question

14-13

Pronghorn, Inc. had outstanding $6,340,000 of 11% bonds (interest payable July 31 and January 31) due in 10 years. On July 1, it issued $8,570,000 of 10%, 15-year bonds (interest payable July 1 and January 1) at 98. A portion of the proceeds was used to call the 11% bonds (with unamortized discount of $190,200) at 103 on August 1.

Prepare the journal entries necessary to record issue of the new bonds and the refunding of the bonds. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
July 1
	(To record issuance of 10% bonds)
August 1
	(To record retirement of 11% bonds)

Answer 1

Prepare the journal entries necessary to record issue of the new bonds and the refunding of the bonds. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
July 1	Cash (8570000*.98)	8398600
	Discount on bonds payable	171400
	Bonds payable		8570000
	(To record issuance of 10% bonds)
August 1	Bonds payable	6340000
	Loss on retirement of bonds	380400
	Discount on bonds payable		190200
	Cash (6340000*1.03)		6530200
	(To record retirement of 11% bonds)