Vidovich Corp. produces and sells soccer equipment. To finance its operations, Vidovich Corp. issued $15,000,000 of 30-year, 14% callable bonds on January 1, 2015, with interest payable on January 1 and July 1. The fiscal year of the company is the calendar year.

a. Journalize the entries to record the following selected transactions:

2015

Jan. 1. Issued the bonds for cash at their principal amount.

Jul. 1. Paid the interest on the bonds.

2021

Jul. 1. Called the bond issue at 98, the rate provided in the bond indenture. (Omit entry for payment of interest.)

b. What factors might have influenced Vidovich Corp.'s decision to call the bonds?