On January $1,2018,$ Blossom Ltd$.$ issued $2,680,000$ of $5-$year, $8\%$ bonds at $95.$ The bonds pay interest annually on January $1.$ By

January $1,2020,$ the market rate of interest for bonds of risk similar to those of Blossom Ltd$.$ had risen. As a result, the market valu

these bonds was $2,490,000$ on January $1,2020-$below their carrying value. Debra Blossom, president of the company, suggests

repurchasing all of these bonds in the open market at the $2,490,000$ price. To do so$,$ the company will have to issue $2,490,000(f$ :

value$)$ of new $10-$year, $10\%$ bonds at par. The president asks you, as controller, "What is the feasibility of my proposed repurchase

plan?"

Answer the following.

What is the carrying value of the outstanding Blossom Corporation $5-$year bonds on January $1,2020?($Assume straight$-$line

amortization.$)$

Carrying value of bonds $,2376000$

Prepare the journal entry to redeem the $5-$year bonds on January $1,2020.$ Prepare the journal entry to issue the new $10-$year

bonds. No$.$ Account Titles and Explanation

Debit

Credit

$($To record redemption of bonds$)$

$($To record sale of bonds at par$)$