Analyzing Financial Statement Effects of Bond Redemption Dechow, Inc., issued $1,000,000 of 8%, 15-year bonds...
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Analyzing Financial Statement Effects of Bond Redemption Dechow, Inc., issued $1,000,000 of 8%, 15-year bonds at 96 on July 1, 2009. Interest is payable semiannually on December 31 and June 30. Through June 30, 2016, Dechow amortized $12,744 of the bond discount. On July 1, 2016, Dechow retired the bonds at 101. Required a. Prepare journal entries to record the issue and retirement of these bonds. (Assume the June interest expense has already been recorded.) General Journal Description Debit Credit 07/01/09 Cash 960,000 Bond discount 40,000 Bonds payable 0 1,000,000 07/01/16 Bonds payable 1,000,000 Loss on retirement of bonds Ox 0 Bond discount 27.256 Cash Ox Date 0 0 b. Post the journal entries from part a to their respective T-accounts. Cash (A) Bonds Payable (L) 07/01/09 960,000 07/01/09 0 1,000,000 07/01/16 07/01/16 1,000,000 0 OX Loss on Retirement of Bonds (E) 07/01/09 0 07/01/16 dx 0 Bond Discount (XL) 40,000 07/01/09 0 07/01/16 0 27,256
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