Question

Long-term Liabilities: Prepare journal entries for the following transactions of Re-Do-It Corp.

3/1/15       Bonds payable with a face value of $900,000, which are dated 1/1/15, are issued at 93 plus accrued in­terest. They bear interest at 9% (payable semiannually at July 1 and January 1). They mature on 1/1/21.

7/1/15       Interest on the above bonds is paid, and amortization of discount is recorded. Straightline amortization is used.

12/1/15     Bonds of a face value of $180,000 (which were issued above on 3/1/15) are purchased at 95 plus accrued interest, and retired. Make all entries necessary to record the retirement. Update amortization on the retired bonds only at this time.

12/31/15   Interest on the remaining bonds is accrued, and amortization of discount is recorded.