On January 1, 2018, Masterweave Industries issued $700,000 of 12% bonds, dated January 1. Interest is payable semi-annually on July 1 and January 1.

The first payment occurs on July 1, 2018.

The bonds mature in three years. The market yield for bonds of similar risk and maturity is 14%.

Required: Prepare the journal entries to:

(a)

Record the bond issuance

B) Account for the bond over the entire three years including repayment on maturity (January 1, 2021).

C) Suppose that on January 1, 2019, Masterweave Industries called its $700,000 bonds. The call price is $685,000.
Required: Prepare the journal entry for this early extinguishment of Masterwear's debt.