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On January 1, 2018, General Bell Company issued $1,200,000 par value, 8%, five-year bonds while the...

On January 1, 2018, General Bell Company issued $1,200,000 par value, 8%, five-year bonds while the effective rate is 12%. The bonds are dated January 1, 2018. The interests are payable semiannually each June 30 and December 31. On January 1, 2020, General Bell calls half the issue at 101 and cancels it. Write all necessary journal entries.

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Expert Solution

01.01.2018 -   BANK ACCOUNT DR           1200000

                         TO BONDS ACCOUNT                    1200000

           (BOND ISSUED AND PAYMENT RECEIVED)

30.06.2018,31.12.2018,30.06.2019 AND 31.12.2019

                          INTEREST ACCOUNT DR 48000

                                     TO BANK                            48000

                     (INTEREST FOR SIX MONTH PAID)

01.01.2020           BONDS ACCOUNT DR    600000

                            PREMIUM ACCOUNT DR 6000

                                    TO BANK                          606000

               (50 % paid @ 101 )

30.06.2020,31.12.2020,30.06.2021,31.12.2021,30.06.2022,31.12.2022

                         INTEREST ACCOUNT     DR       24000

                              TO BANK ACCOUNT                           24000

( Interest paid for six month) Same entry in each half year

     01.01.2023            BONDS ACCOUNT     DR          600000

                                        TO BANK                                      600000

                         (REMAINING 50 % REDEEMED)

ekkarill92 answered 9 months ago
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