Question

Hayden Co. has outstanding $55 million face amount of 6% bonds that were issued on January 1, 2010, for $55,520,000. The 20-year bonds mature on December 31, 2029, and are callable at 102 (that is, they can be paid off at any time by paying the bondholders 102% of the face amount).

Assume that the bonds are called on December 31, 2016. Record the journal entry to show the effect of the retirement of the bonds. (Hint: Calculate the amount paid to bondholders; determine how much of the bond premium would have been amortized prior to calling the bonds; and then calculate the gain or loss on retirement.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

I have worked and reworked and it still says it is wrong.

Answer is complete but not entirely correct.

No	Event	General Journal	Debit	Credit
1	1	Bonds payableselected answer correct	55,000,000selected answer correct	not attempted
		Loss on early retirement of bondsselected answer correct	580,000selected answer incorrect	not attempted
		Premium on bonds payableselected answer correct	520,000selected answer incorrect	not attempted
		Cashselected answer correct	not attempted	56,100,000selected answer correct

Answer 1

Journal Entry
Date	Particulars	Dr. Amt.	Cr. Amt.
31-Dec-16	Bonds Payable	55,000,000.00
	Premium on Bonds Payable	338,000.00
	Loss on Early Retirement of Bond	762,000.00
	Cash		56,100,000.00
	(record the retiremenyt of bonds)

Premium Amortization Schedule
(straight Line Method)
Date	Cash Interest Paid - $55,000,000 X 6%	Period Interest Expense -	Premium Amortization	Unamortized Premium	Bonds Carrying Amount
	A	B = A +C	C = A-B	D = D - C	E = $55,000,000 + D
1-Jan-10	-	-	-	520,000	55,520,000
31-Dec-10	3,300,000	3,274,000	26,000	494,000	55,494,000
31-Dec-11	3,300,000	3,274,000	26,000	468,000	55,468,000
31-Dec-12	3,300,000	3,274,000	26,000	442,000	55,442,000
31-Dec-13	3,300,000	3,274,000	26,000	416,000	55,416,000
31-Dec-14	3,300,000	3,274,000	26,000	390,000	55,390,000
31-Dec-15	3,300,000	3,274,000	26,000	364,000	55,364,000
31-Dec-16	3,300,000	3,274,000	26,000	338,000	55,338,000