The following two cases are independent.
Case A 

At 31 December 20X3, QML Ltd. reports the following on its statement of financial position:

Accrued interest payable of $450,000 was recorded on 31 December 20X3 ($15 million × 6% × 6/12) and the bond discount was correctly amortized to 31 December 20X3. On 1 March 20X4, 60% of the bond issue was bought back in the open market and retired at 98 plus accrued interest.

Required:
Provide the entries to record the interest and the retirement. Record interest and amortization only on the portion of the bond that is retired on 1 March 20X4; amortization of $429 must be recorded for the upfront costs and $1,494 on the discount. 

Case B 

On 31 December 20X7, Dartmouth Co. has the following bond on the statement of financial position:

Accrued interest payable of $240,000 was recorded on 31 December 20X7 ($12 million × 8% × 3/12) and the bond discount was correctly amortized to 31 December 20X7. On 31 March 20X8, semi-annual interest was paid and the bond discount was amortized by a further $8,000.
Then, 30% of the bond was retired at a cost of $3,515,000 (exclusive of interest).

Required:
Provide the entries to record the bond interest and retirement on 31 March 20X8.

Transcribed Image Text:

Bonds payable, due 30 June 20X16, 6%, interest payable annually on 30 June Discount on bonds payable Deferred upfront costs $15,000,000 186,750 53,550