Chapter 11, Problem 11.5EX

Entries for issuing and calling bonds; loss

Hoover Corp., a wholesaler of music equipment, issued $30,000,000 of 20-year, 8% callable bonds on March 1, Year 1, at their face amount, with interest payable on March 1 and September 1. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions:

Year 1
Mar. 1.	Issued the bonds for cash at their face amount.
Sept. 1.	Paid the interest on the bonds.
Year 3
Sept. 1.	Called the bond issue at 101.5, the rate provided in the bond indenture. (Omit entry for payment of interest.)