Answer:
1. Dr Interest Expenses $2,380,000
Cr Discount on Bonds Payable $280,000
Cr Cash $2,100,000
2. Dr Bonds Payable $35,000,000
Dr Loss on redemption of Bonds $2,120,000
Cr Discount on Bonds Payable $720,000
Cr Cash $36,400,000
Explanation:
Preparation of the necessary journal entries by Twin Digital on July 1 2021
1. Dr Interest Expenses $2,380,000
[$ (35 - 1 million) x 14% x 6/12]
Cr Discount on Bonds Payable $280,000
Cr Cash $2,100,000
[$35 million x 12% x 6/12]
(Being to record Interest paid)
2. Dr Bonds Payable $35,000,000
Dr Loss on redemption of Bonds $2,120,000
Cr Discount on Bonds Payable $720,000
[1 million - $280,000]
Cr Cash $36,400,000
[35 million x 104/100]
(Being to record Bonds called at 104)
