Question
Penny Company has outstanding $600,000 of 9% bonds, which were issued on April 1, 20A, for cash proceeds of $645,442 (including accrued interest). Interest is
Penny Company has outstanding $600,000 of 9% bonds, which were issued on April 1, 20A, for cash proceeds of $645,442 (including accrued interest). Interest is payable annually on January 1, and the bonds mature on 1/1/20K. Penny retires $180,000 face amount of the bonds on 7/1/20C, at 102 plus accrued interest. Penny uses straight line amortization, and the book value of the bonds at the retirement date was $187,371. Required (problem is included for practice with entries; exam will cover the effective interest method only): What entries are required to record the issuance of the bonds and at the retirement (extinguishment) @ 7/1/20C?
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