The December 31, 2017, balance sheet of Ming Inc. included 12% bonds with a face amount of $107 million. The bonds were issued in 2005 and had a remaining discount of $4,100,000 at December 31, 2017. On January 1, 2018, Ming called the bonds at a price of 102 Required: Prepare the journal entry by Ming to record the retirement of the bonds on January 1 2018 (If no entry is required for

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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**Educational Resource: Preparing a Bond Retirement Journal Entry**

**Scenario Overview:**
On December 31, 2017, the balance sheet of Ming Inc. included 12% bonds with a face amount of $107 million. Initially issued in 2005, these bonds had a remaining discount of $4,100,000 as of December 31, 2017. On January 1, 2018, Ming Inc. retired these bonds at a call price of 102.

**Task Requirement:**
Prepare the necessary journal entry to record the retirement of the bonds on January 1, 2018. If a transaction/event does not require an entry, indicate by selecting "No journal entry required." Ensure to enter amounts in whole dollars.

**Instructional Notes:**
- Enter debits before credits when making a journal entry.
- The specified call price of 102 indicates a premium of 2% over the face value, implying a payout of $109.14 million ($107 million * 102/100).

**Journal Entry Worksheet:**

*Record the retirement of the bonds on January 1, 2018.*

| Date          | General Journal         | Debit        | Credit       |
|---------------|-------------------------|--------------|--------------|
| January 01, 2018 | [To be filled by student] | [To be filled by student] | [To be filled by student] |

*Action Items:*
1. Calculate the total amount to be paid at the call price.
2. Consider the bond discount in the accounting records to determine the correct entries.
3. Record the bond retirement transaction accurately by entering it in the "General Journal" columns.

**Interactive Features:**
- Utilize the “Record entry” button to submit your journal entry.
- The “Clear entry” button is available to reset your input fields.
- Access a comprehensive review by selecting “View general journal” after completing the entry.
Transcribed Image Text:**Educational Resource: Preparing a Bond Retirement Journal Entry** **Scenario Overview:** On December 31, 2017, the balance sheet of Ming Inc. included 12% bonds with a face amount of $107 million. Initially issued in 2005, these bonds had a remaining discount of $4,100,000 as of December 31, 2017. On January 1, 2018, Ming Inc. retired these bonds at a call price of 102. **Task Requirement:** Prepare the necessary journal entry to record the retirement of the bonds on January 1, 2018. If a transaction/event does not require an entry, indicate by selecting "No journal entry required." Ensure to enter amounts in whole dollars. **Instructional Notes:** - Enter debits before credits when making a journal entry. - The specified call price of 102 indicates a premium of 2% over the face value, implying a payout of $109.14 million ($107 million * 102/100). **Journal Entry Worksheet:** *Record the retirement of the bonds on January 1, 2018.* | Date | General Journal | Debit | Credit | |---------------|-------------------------|--------------|--------------| | January 01, 2018 | [To be filled by student] | [To be filled by student] | [To be filled by student] | *Action Items:* 1. Calculate the total amount to be paid at the call price. 2. Consider the bond discount in the accounting records to determine the correct entries. 3. Record the bond retirement transaction accurately by entering it in the "General Journal" columns. **Interactive Features:** - Utilize the “Record entry” button to submit your journal entry. - The “Clear entry” button is available to reset your input fields. - Access a comprehensive review by selecting “View general journal” after completing the entry.
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