Tyrell Company issued callable bonds with a par value of $10,000. The call option requires Tyrell to

Question:

Tyrell Company issued callable bonds with a par value of $10,000. The call option requires Tyrell to pay a call premium of$500 plus par (or a total of $10,500) to bondholders to retire the bonds. On July 1, Tyrell exercises the call option. The call option is exercised after the semiannual interest is paid the day before on June 30. Record the entry to retire the bonds under each separate situation.

1. The bonds have a carrying value of $9,000.

2. The bonds have a carrying value of $11,000.

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,...

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