On October 1, 2009, Garden Equipment Corporation issued 1,600 bonds at face valu
ID: 2385439 • Letter: O
Question
On October 1, 2009, Garden Equipment Corporation issued 1,600 bonds at face value. The bond certificates indicate a face value of $1,000, a stated interest rate of 7.8 percent paid annually on September 30, and a September 30, 2020 maturity date.
Prepare the journal entry to record the bond issue on October 1, 2009. (Omit the "$" sign in your response.)
Assume Garden Equipment retires the bond early on October 1, 2012, at a price of 103.4. Prepare the journal entry to record this early retirement. (Omit the "$" sign in your response.)
Requirement 1:
Prepare the journal entry to record the bond issue on October 1, 2009. (Omit the "$" sign in your response.)
Explanation / Answer
Debit Cash 1,600,000 Credit Bonds Payable 1,600,000 Debit Interest Expense 31,200 Credit Interest Payable 31,200 Debit Bonds Payable 1,600,000 Debit Loss on Bond Retirement 54,400 Credit Cash 1,654,400