Potter Corp., a wholesaler of office equipment, issued $16,000,000 of 20-year, 8% call- able bonds on April 1, 2015, with interest payable on April 1 and October 1. The fiscal year of the company is the calendar year.
a. Journalize the entries to record the following selected transactions:
2015
Apr. 1. Issued the bonds for cash at their face value.
Oct. 1. Paid the interest on the bonds.
2019
Oct. 1.Called the bond issue at 102, the rate provided in the bond indenture. (Omit entry for payment of interest.)
b. What factors might have influenced Potter Corp.'s decision to call the bonds?