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 95 on Dec. 31, 2018. Expenses of recall are $4,000. . Prepare a Journal entry on Dec 31, 2018 to record the extinguishment of debt. Date Cash Paid 4% Interest Expense 5% Discount Amortized Carrying Amount of Bonds 1/1/2018 $ 700,303 7/1/2018 $32,000 $ 35,015$ 3,015 $ 703,318 12/31/2018 $32,000 $ 35,166 $ 3,166 $ 706,484 PUT JOURNAL ENTRY IN THE BOX - MAKE SURE DEBITS ARE LEFT AND CREDITS ARE RIGHT Journal Entry