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Three years ago on January 1, 2010, American Insulation Company issued 10%, $800,000, 10-year bonds for S770,000. Debt transaction costs were $3,000. American Insulation exercised
Three years ago on January 1, 2010, American Insulation Company issued 10%, $800,000, 10-year bonds for S770,000. Debt transaction costs were $3,000. American Insulation exercised its call privilege on December, 31, 2012, and retired the bonds for $790,000. Interest was paid semiannually. Debt transaction costs were amortized over the tenure of the bonds using the effective interest method. The effective interest rate per semiannual period was 5.34%. Required Prepare the journal entry to record the call of the bonds. (Do not round intermediate calculations.) Debit 800,000 11,000 General Journal Credit Bonds payable Loss on early extinguishment Discount on bonds payable Cash 21,000 8 790,000
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