Question
On March 31, 2011, Hanson Corporation sold $9,000,000 of its 8%, 10-year bonds for $8,653,500 including accrued interest. The bonds were dated January 1, 2011.
On March 31, 2011, Hanson Corporation sold $9,000,000 of its 8%, 10-year bonds for
$8,653,500 including accrued interest. The bonds were dated January 1, 2011. Interest is
paid semiannually on January 1 and July 1. On April 1, 2015, Hanson purchased 1/2 of the
bonds on the open market at 99 plus accrued interest and canceled them. Hanson uses the
straight-line method for amortization of bond premiums and discounts.
(a) What was the amount of the gain or loss on retirement of the bonds?
(b) Prepare the journal entry needed at April 1, 2015 to record retirement of the bonds.
Assume that interest and premium or discount amortization have been recorded through
January 1, 2015. Record interest and amortization on only the bonds retired.
(c) Prepare the journal entry needed at July 1, 2015 to record interest and premium or discount amortization.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started