Robinson, Inc. had outstanding $5 million of 11% bonds (interest payable July 31 and January 31) due in 10 years. On July 1, it issued $7 million of 15-year, 10% bonds (interest payable July 1 and January 1) at 98. A portion of the proceeds was used to call the 11% bonds at 102 on August 1. The unamortized bond discount for the 11% bonds was $120,000 on August 1.
Instructions
Prepare the necessary journal entries to record the issue of the new bonds and the retirement of the old bonds.