QS 10-9 Bond retirement by call option LO P4

On July 1, 2017, Advocate Company exercises an $7,200 call option (plus par value) on its outstanding bonds that have a carrying value of $371,000 and par value of $360,000. The company exercises the call option after the semiannual interest is paid on June 30, 2017. Record the entry to retire the bonds.

Journal Entry

(Record the retirement of bonds before maturity.)