Polders Corp., a wholesaler of office equipment, issued $16,680,000 of 25-year,
ID: 2380246 • Letter: P
Question
Polders Corp., a wholesaler of office equipment, issued $16,680,000 of 25-year, 9% callable bonds on March 1, 2014, with interest payable on March 1 and September 1. The fiscal year of the company is the calendar year.
Journalize the entries to record the above selected transactions.
2014 Mar. 1 Issued the bonds for cash at their face amount. Sept. 1 Paid the interest on the bonds. 2018 Sept. 1 Called the bond issue at 102, the rate provided in the bond indenture. (Omit entry for payment of interest.)Explanation / Answer
March 1, 2014
Debit: Cash 16,680,000
Credit: Bonds Payable 16,680,000
September 1, 2014
16,680,000*.09*.5 = 750,600
Debit: Interest expense 750,600
Credit: Cash 750,600
September 1
16,680,000*1.02 = 17,013,600
Debit: Bonds payable 16,680,000
Debit: Loss on bond retirement 333,600
credit: Cash 17,013,600