Problem #1 Extinguishment of Debt - Buchanan Company issues 10-year term bonds with a par value of $800,000, dated January 1, 2018, and bearing interest at an annual rate of 8% (Stated Rate) payable semiannually on January 1 and July 1. Market interest rate is 10%. Bonds are recalled at 110 on Dec. 31, 2018. Expenses of recall are $2,500. . Prepare Journal entry Dec 31, 2018 to record the extinguishment of debt. Date 1/1/2018 Cash Paid 4% Interest Expense 5% Discount Amortized Carrying Amount of Bonds $ 700,303 7/1/2018 $32,000 $ 12/31/2018 $32,000 $ 35,015 $ 3,015 $ 703,318 35,166 $ 3,166 $ 706,484 Journal Entry