On July 1, 2013, Advocate Company exercises a $ 8,000 call option (plus par value) on its outstanding bonds that have a carrying value of $ 416,000 and par value of $ 400,000 The company exercises the call option after the semiannual interest is paid on June 30, 2013 Record the entry to retire the ...

July 1 Bonds Payable 400000 Premium o ...

On July 1, 2013, Advocate Company exercises a $ 8,000 call option (plus par value) on its

Question:

On July 1, 2013, Advocate Company exercises a $ 8,000 call option (plus on its outstanding bonds that have a carrying value of $ 416,000 and of $ 400,000. The company exercises the call option after the semiannual interest is paid on June 30, 2013. Record the entry to retire the bonds.

Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...