On July 1, 2015, ABC Co. issued 10-year, $4,574 million maturity value, 3% coupon bonds when the market rate was 2% for a cash price of $4,994 million. Interest was payable semi-annually on Dec. 31 and June 30. ABC also issued $3,527 million face value, 20-year, zero coupon bonds on July 1, 2017, that mature June 30, 2037, for a cash price of $2,619 million. The effective market interest rate at issuance was 1.5%. ABC repurchased $1,143 million face value coupon bonds on June 30, 2020, for $1,220 million cash (after interest was paid) and $582 million in face value of the zero- coupon bonds on June 30, 2021, for a purchase price of $432 million cash.

1. Prepare the journal entries to record the repurchase of some of the debt in 2020 and 2021. You must determine the percentage of the face value repurchased by dividing the repurchased amount by the original maturity value of the bonds to determine the % bought back. Please express that % to two decimal places. [Repurchasing some of the bonds before the maturity date is called early extinguishment of the debt. The company makes a payment to the bondholders, who relinquish the bonds and their right to collect the face value at maturity, and the debt is removed from the books. To record the early extinguishment, the company makes a journal entry to remove the appropriate bond payable and discount/premium accounts, decrease cash by the amount paid to the bondholders, and record any gain or loss as the difference between the book value and cash received. Look at your answer to #5 and note that a portion of each account related to this debt must be removed from the books. [The journal entry is analogous to the entry you would use to remove a long-term asset, along with its accumulated depreciation, from the books when it is sold.]