Question
On January 1, Taylor Manufacturing issued $3,500,000 par value 4%, 5-year bonds (i.e., there were 3,500 of $1,000 par value bonds in the issue).
On January 1, Taylor Manufacturing issued $3,500,000 par value 4%, 5-year bonds (i.e., there were 3,500 of $1,000 par value bonds in the issue). Interest is payable semiannually each January 1 and July 1 with the first interest payment due at the end of the period on July 1. The market rate of interest was 8% on the date that Taylor issued the bonds. Taylor retired the bonds at $2,900,000 with an open market purchase at the end of the first year. Prepare the journal entry to record the derecognition of the obligation. Taylor uses the effective interest rate method. (Use the present value and future value tables, the formula method, a financial calculator, or a spreadsheet for your calculations. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, X.XXXXX. Round all intermediary and final answers to the nearest whole dollar. Record debits first, then credits. Exclude explanations from any journal entries.) Account Retirement Date December 31
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