Chapter 12, Problem 12.9EX

Entries for issuing and calling bonds; gain

Emil Corp. produces and sells wind-energy-driven engines. To finance its operations, Emil Corp. issued $15,000,000 of 20-year, 9% callable bonds on May 1, 2016 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:

2016

May 1. Issued the bonds for cash at their face amount.

Nov.1. Paid the interest on the bonds.

2022

Nov.1. Called the bond issue at 96, the rate provided in the bond indenture. (Omit entry for payment of interest.)