Question: On January 1, Todd Manufacturing issued $ 4,500,000 par value 8%, five- year bonds ( i. e., there were 4,500 $ 1,000 par value bonds

On January 1, Todd Manufacturing issued $ 4,500,000 par value 8%, five- year bonds ( i. e., there were 4,500 $ 1,000 par value bonds in the issue). Interest is payable semiannually each January 1 and July 1 with the first interest payment due at the end of the period on July 1. The market rate of interest was 10% on the date Todd issued the bonds. Todd retired the bonds at $ 4,000,000 with an open market purchase at the end of the first year. Prepare the journal entry to record the derecognition of the obligation. Todd uses the effective interest rate method.

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