On September 30, 2012, Carla Vista Company issued 11% bonds with a par value of $430,000 due in 20 years. They were issued at 98 and were callable at 105 at any date after September 30, 2017. Because Carla Vista Company was able to obtain financing at lower rates, it decided to call the entire issue on September 30, 2018, and to issue new bonds. New 9% bonds were sold in the amount of $810,000 at 104; they mature in 20 years. Carla Vista Company uses straight-line amortization. Interest payment dates are March 31 and September 30.

On September 30, 2012, Carla Vista Company issued 11% bonds with a par value of $430,000 due in 20 years. They were issued at 98 and were callable at 105 at any date after September 30, 2017. Because Carla Vista Company was able to obtain financing at lower rates, it decided to call the entire issue on September 30, 2018, and to issue new bonds. New 9% bonds were sold in the amount of $810,000 at 104; they mature in 20 years. Carla Vista Company uses straight-line amortization. Interest payment dates are March 31 and September 30.

College Accounting (Book Only): A Career Approach

13th Edition

ISBN:9781337280570

Author:Scott, Cathy J.

Publisher:Scott, Cathy J.

ChapterB: Bad Debts

Section: Chapter Questions

Problem 2P: Hardys Landscape Services total revenue on account for 2018 amounted to 273,205. The company, which...

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Practice Exercise 14-03 (Part Level Submission)

2 Your answer is partially correct. Try again.
Prepare journal entries to record the redemption of the old issue and the sale of the new issue on September 30, 2018. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If
no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Rectangular Snip
Debit
Credit
Bonds Payable
430000
Loss on Redemption of Bor
29670
Discount on Bonds Paya
8170
Cash
451500
(To record the redemption of old issue)
Interest Expense
17820
Premium on Bonds Payable
405
Interest Payable
18225
(To record the sale of new issue)
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