BONDS ISSUED AT A DISCOUNT, REDEEMED AT A GAIN Cline & Co. issued the following bonds at a discount:

Date of issue and sale: .....April 1, 20-1

Principal amount: .......$500,000

Sale price of bonds: ......98

Denomination of bonds: .....$1,000

Life of bonds: .........20 years

Stated rate: ........9%, payable semiannually on

.............September 30 and March 31

REQUIRED

Prepare journal entries for:

(a) Issuance of the bonds.

(b) Interest payment and discount amortization on the bonds on September 30, 20-1.

(c) Year-end adjustment on the bonds for 20-1.

(d) Reversing entry for the beginning of 20-2.

(e) Redemption of $50,000 of the bonds on April 1, 20-4, at 96.