In: Accounting
On January 1, 2011, Davis Corporation issued $3,900,000 of 7% bonds at 101. Interest is paid annually on December 31 of each year. The bonds mature on December 31, 2027, and the company uses the straight-line method of amortization. On January 2, 2019, Davis reacquired the bonds and recognized a loss of $88,000.
1. Calculate the reacquisition price of the bonds on January 2, 2019. (102.7564103 is wrong)
2. Prepare the journal entry to record the reacquisition of Davis’s bonds on January 2, 2019. (I started some of it below)
DATE | ACCOUNT TITLE | DEBIT | CREDIT | ||
---|---|---|---|---|---|
1 |
Jan 2 |
Bonds Payable |
3,900,000 is correct |
||
2 |
Premium on Bonds Payable |
19500 is wrong |
|||
3 |
Loss on Bond Reacquisition |
88,000 is correct |
|||
4 |
Cash |