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On January 1, Timmy Manufacturing issued $4,800,000 par value , 6%, 5-year bonds (i.e., there...

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Accounting

On January 1, Timmy Manufacturing issued $4,800,000 par value , 6%, 5-year bonds (i.e., there were 4,800 of $1,000 par value bonds in the issue). Interest is payable semiannually each January 1 and July 1 with the first interest payment due at the end of the period on July 1. The market rate of interest was 8% on the date that Timmy issued the bonds. Timmy retired the bonds at $4,200,000 with an open market purchase at the end of the first year. Prepare the journal entry to record the derecognition of the obligation. Timmy uses the effective interest rate method

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