Answer:
Wildhorse Company
Journal Entries:
September 30, 2018:
Debit 9% Bonds Payable $580,000
Debit Bond Redemption Expenses $17,400
Credit Cash $597,400
To record the redemption of the 9% Bonds Payable at 103.
September 30, 2018:
Debit Cash $728,000
Credit 7% Bonds Payable $700,000
Credit Bonds Premium $28,000
To record the sale of 7% Bonds Payable at 104.
Explanation:
a) Dat and Calculations:
9% bonds payable at par value = $580,000
Issued at a discount of $17,400 ($580,000 * 97/100) - $580,000
Redeemed at a premium of $17,400 ($580,000 * 103/100) - $580,000
7% bonds payable at par value = $700,000
Issued at a premium of $28,000 ($700,000 * 104/100) - $700,000
