The long-term liability section of Eastern Post Corporation’s balance sheet as of December 31, 2017, included10% bonds having a face amount of $40 million and a remaining premium of $6 million. On January 1, 2018,Eastern Post retired some of the bonds before their scheduled maturity.Required:Prepare the journal entry by Eastern Post to record the redemption of the bonds under each of the independentcircumstances below:1. Eastern Post called half the bonds at the call price of 102 (102% of face amount).2. Eastern Post repurchased $10 million of the bonds on the open market at their market price of $10.5 million.

Question

The long-term liability section of Eastern Post Corporation’s balance sheet as of December 31, 2017, included
10% bonds having a face amount of $40 million and a remaining premium of $6 million. On January 1, 2018,
Eastern Post retired some of the bonds before their scheduled maturity.
Required:
Prepare the journal entry by Eastern Post to record the redemption of the bonds under each of the independent
circumstances below:
1. Eastern Post called half the bonds at the call price of 102 (102% of face amount).
2. Eastern Post repurchased $10 million of the bonds on the open market at their market price of $10.5 million.

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