Entries for Issuing and Calling Bonds; Gain

Emil Corp. produces and sells wind-energy-driven engines. To finance its operations, Emil Corp. issued $437,000 of 15-year, 10% callable bonds on May 1, 20Y1, at their face amount, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year.

Journalize the entries to record the following selected transactions:

20Y1
May 1	Issued the bonds for cash at their face amount.
Nov. 1	Paid the interest on the bonds.
20Y5
Nov. 1	Called the bond issue at 98, the rate provided in the bond indenture. (Omit entry for payment of interest.)

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Issued the bonds for cash at their face amount. If an amount box does not require an entry, leave it blank.

20Y1, May 1	Accounts PayableBonds PayableCashInterest ExpenseLoss on Redemption of BondsCash	Cash	Cash
	Accounts PayableBonds PayableCashInterest ExpenseLoss on Redemption of BondsBonds Payable	Bonds Payable	Bonds Payable

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Paid the interest on the bonds. If an amount box does not require an entry, leave it blank.

20Y1, Nov. 1	Bonds PayableCashInterest ExpenseInterest PayableLoss on Redemption of BondsInterest Expense	Interest Expense	Interest Expense
	Accounts PayableBonds PayableCashInterest ExpenseLoss on Redemption of BondsCash	Cash	Cash

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Called the bond issue at 98, the rate provided in the bond indenture. (Omit entry for payment of interest.) If an amount box does not require an entry, leave it blank.

20Y5, Nov. 1	Bonds PayableCashGain on Redemption of BondsInterest ExpenseLoss on Redemption of BondsBonds Payable	Bonds Payable	Bonds Payable
	Bonds PayableGain on Redemption of BondsInterest ExpenseInterest PayableLoss on Redemption of BondsGain on Redemption of Bonds	Gain on Redemption of Bonds	Gain on Redemption of Bonds
	Accounts PayableBonds PayableCashInterest ExpenseLoss on Redemption of BondsCash	Cash	Cash