Coronado, Inc. had outstanding $6,360,000 of 12% bonds (interest payable July 31
ID: 2408173 • Letter: C
Question
Coronado, Inc. had outstanding $6,360,000 of 12% bonds (interest payable July 31 and January 31) due in 10 years. On July 1, it issued $8,450,000 of 11%, 15-year bonds (interest payable July 1 and January 1) at 99. A portion of the proceeds was used to call the 12% bonds (with unamortized discount of $254,400) at 104 on August 1.
Prepare the journal entries necessary to record issue of the new bonds and the refunding of the bonds. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
July 1
(To record issuance of 11% bonds)
August 1
(To record retirement of 12% bonds)
Date
Account Titles and Explanation
Debit
Credit
July 1
(To record issuance of 11% bonds)
August 1
(To record retirement of 12% bonds)
Explanation / Answer
Journal entry :
Date accounts & explanation debit credit July 1 Cash (8450000*99/100) 8365500 Discount on bonds payable 84500 Bonds payable 8450000 (To record issuance of 11% bonds) Aug 1 Bonds payable 6360000 Loss on retirement of bonds 508800 Discount on bonds payable 254400 Cash (6360000*1.04) 6614400 (To record retirement of 12% bonds)