Prepare general journal entries to record the following bond transactions of Cradle Corporation. 1989 Nov. 1 Sold
Question:
Prepare general journal entries to record the following bond transactions of Cradle Corporation.
1989 Nov. 1 Sold \(\$ 2.5\) million par value of its own \(9.5 \%, 10\)-year bonds at a price to yield the buyers a \(9 \%\) annual return. The bonds were dated November 1, 1989, with interest payable on each May 1 and November 1 .
Dec. 31 Made an adjusting entry to record the accrued interest on the bonds and to amortize the premium applicable to 1989. The straight-line method was used to calculate the premium amortized.
1990 May 1 Paid the semiannual interest on the bonds and amortized the remainder of the premium applicable to the first interest period.
Nov. 1 Paid the semiannual interest on the bonds and amortized the premium applicable to the second interest period of the issue.
1991 Nov. 1 After recording the entry paying the semiannual interest on the bonds on this date and amortizing a portion of the premium, Cradle Corporation purchased \(1 / 10\) of the bonds at \(1003 / 4\) and retired them. Present only the entry to record the purchase and retirement of the bonds.
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