Answer:
Dechow, Inc.
Journal Entries:
July 1, 2009: DebitCash $720,000
Debit Bonds Discount $30,000
Credit 8% Bonds Payable $750,000
To record the issuance of a 15-year bonds at 96 with semiannual interest payments.
July 1, 2016 Debit Bonds Payable $750,000
Debit Bonds Retirement Loss $27,942
Credit Unamortized discount $20,442
Credit Cash $757,500
To record the retirement of the bonds at 101.
Explanation:
a) Data and Analysis:
July 1, 2009: Cash $720,000 Bonds Discount $30,000 8% Bonds Payable $750,000 15-year bonds at 96 on July 1, 2009 with semiannual interest payments.
July 1, 2016 Bonds Payable $750,000 Bonds Retirement Loss $27,942 Unamortized discount $20,442 Cash $757,500 retired the bonds at 101.
Unamortized discount:
Discount on the bonds = $30,000 ($750,000 - $720,000)
Amortized bonds discount (9,558)
Unamortized bonds discount $20,442
