Answer: Please see expalantion coumn for answer
Explanation:
1) To record issuance of bonds
Date Account Title Debit Credit
July 1 Cash $9,457,500
Discount on bond payable $292,500
Bond payable $9,750,000
Calculation:
Cash =$9,750,000 x 97% = $9,457, 500
Discount = $9, 750,000 - $9,457,500= $292,500
2)To record retirement of 11% bonds
Date Account Title Debit Credit
August 1st Bond payable $5,460,000
Loss on Redemption of bonds $218,400
Cash $5,569,200
Discount on Bonds payable $109,200
Calculation:
Cash =$5,460,000 x 102% = $5,569,200
Loss on Redemption of bonds = Cash + Discount on bonds payable - Bonds payable = $5,569,200 + $109,200) - $5,460,000= $218,400
