Chapter 11, Problem 11.6EX

Entries for issuing and calling bonds; gain

Mia Breen Corp. produces and sells wind-energy-driven engines. To finance its operations, Mia Breen issued $18,000,000 of 20-year, 4% callable bonds on May 1, Year 1, 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:

Year 1
May 1.	Issued the bonds for cash at their face amount.
Nov. 1.	Paid the interest on the bonds.
Year 5
Nov. 1.	Called the bond issue at 99, the rate provided in the bond indenture. (Omit entry for payment of interest.)