Buzz Electric sold $3,000,000, 9%, 20-year bonds on January 1, 2007. The bonds were dated January 1 and pay interest on January 1. The bonds were sold at 103.

Instructions

(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2007.

(b) At December 31, 2007, $4,500 of the bond premium had been amortized. Show the balance sheet presentation of the bond liability at December 31, 2007. (Assume that interest has been paid.)

(c) At December 31, 2008, when the carrying value of the bonds was $3,081,000, the company redeemed the bonds at 104. Record the redemption of the bonds assuming that interest for the year had already been paid.