The long-term liability section of Twin Digital Corporations balance sheet as of December 31, 2020, included 10% bonds having a face amount of $50 million and a remaining discount of $1 million. Disclosure notes indicate the bonds were issued to yield 12%. Interest expense is recorded at the effective interest rate and paid on January 1 and July 1 of each year. On July 1, 2021, Twin Digital retired the bonds at 103 ($51.5 million) before their scheduled maturity. Required: 1. & 2. Prepare the necessary journal entries by Twin Digital on July 1, 2021.

Journal 1: Record the semiannual interest.

~ interest expense

~Discounts on bonds payable

~cash

Journal2: Record the redemption of the bonds.

~ bonds payable

~ loss on early extinguishment

~ discount on bonds payable

~ cash