Entries for Issuing and Calling Bonds; Gain Emil Corp. produces and sells wind-energy-driven engines. To finance its operations, Emil Corp. issued $601,000 of 25-year, 12% callable bonds on May 1, 20Y1, at their face amount, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions: 20Y1 May 1 Issued the bonds for cash at their face amount. Nov. 1 Paid the interest on the bonds. 20Y5 Nov. 1 Called the bond issue at 98, the rate provided in the bond indenture. (Omit entry for payment of interest.) Issued the bonds for cash at their face amount. If an amount box does not require an entry, leave it blank. 20Y1, May 1 Cash Cash Bonds Payable Bonds Payable Paid the interest on the bonds. If an amount box does not require an entry, leave it blank. 20Y1, Nov. 1 Interest Expense Interest Expense Cash Cash Called the bond issue at 98, the rate provided in the bond indenture. (Omit entry for payment of interest.) If an amount box does not require an entry, leave it blank. 20Y5, Nov. 1 Bonds Payable Bonds Payable Gain on Redemption of Bonds Gain on Redemption of Bonds Cash Cash

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Entries for Issuing and Calling Bonds; Gain

Emil Corp. produces and sells wind-energy-driven engines. To finance its operations, Emil Corp. issued $601,000 of 25-year, 12% callable bonds on May 1, 20Y1, at their face amount, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year.

Journalize the entries to record the following selected transactions:

20Y1
May 1	Issued the bonds for cash at their face amount.
Nov. 1	Paid the interest on the bonds.
20Y5
Nov. 1	Called the bond issue at 98, the rate provided in the bond indenture. (Omit entry for payment of interest.)

Issued the bonds for cash at their face amount. If an amount box does not require an entry, leave it blank.

20Y1, May 1		Cash	Cash
		Bonds Payable	Bonds Payable

Paid the interest on the bonds. If an amount box does not require an entry, leave it blank.

20Y1, Nov. 1		Interest Expense	Interest Expense
		Cash	Cash

Called the bond issue at 98, the rate provided in the bond indenture. (Omit entry for payment of interest.) If an amount box does not require an entry, leave it blank.