Presented below are two independent situations:

(a) Morten Corporation purchased $480,000 of its bonds on June 30, 2014, at 102 and immediately

retired them. The carrying value of the bonds on the retirement date was $431,100. The bonds pay

annual interest and the interest payment due on June 30, 2014, has been made and recorded.

(b) McEvoy, Inc., purchased $330,000 of its bonds at 96 on June 30, 2014, and immediately retired

them. The carrying value of the bonds on the retirement date was $321,000. The bonds pay annual

interest and the interest payment due on June 30, 2014, has been made and recorded.

Instructions

For each of the independent situations, prepare the journal entry to record the retirement or conversion of

the bonds. Explain in words on which accounts you have chosen. Additionally explain your calculations.