Hoover Corp., a wholesaler of music equipment, issued $32,700,000 of 20-year, 6% callable bonds on March 1, 20Y2, at their face amount, with interest payable on March 1 and September 1. The fiscal year of the compant is the calendar year. Journalize the entries to record the following selected transactions. Refer to the Chart of Accounts for exact wording of account titles. 20Y2 Mar. Sept. 20Y4 Sept. 1 Issued the bonds for cash at their face amount. Paid the interest on the bonds. 1 1 Called the bond issue at 102, the rate provided in the bond indenture. (Omit entry for payment of interest.)
Hoover Corp., a wholesaler of music equipment, issued $32,700,000 of 20-year, 6% callable bonds on March 1, 20Y2, at their face amount, with interest payable on March 1 and September 1. The fiscal year of the compant is the calendar year. Journalize the entries to record the following selected transactions. Refer to the Chart of Accounts for exact wording of account titles. 20Y2 Mar. Sept. 20Y4 Sept. 1 Issued the bonds for cash at their face amount. Paid the interest on the bonds. 1 1 Called the bond issue at 102, the rate provided in the bond indenture. (Omit entry for payment of interest.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Hoover Corp., a wholesaler of music equipment, issued $32,700,000 of 20-year, 6% callable bonds on March 1, 20Y2, at their face amount, 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 following selected transactions. Refer to the Chart of Accounts for exact wording of account titles.
20Y2
Mar.
Sept.
20Y4
Sept.
1
1
Issued the bonds for cash at their face amount.
Paid the interest on the bonds.
1 Called the bond issue at 102, the rate provided in the bond indenture. (Omit entry for payment of
interest.)
Expert Solution
Step 1: Define Callable bonds
A callable bond is enables its issuer to redeem it or "call" it ahead of the bond's scheduled maturity date. When a bond is callable, the issuer has the option to repurchase it from bondholders, The callable bonds have fixed call dates or times when the issuer may decide to call the bonds.
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