On January 1, 2013 DEF Company had issued $5,000,000 of 10-year bonds with a 6% coupon rate
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Question:
On January 1, 2013 DEF Company had issued $5,000,000 of 10-year bonds with a 6% coupon rate and interest to be paid annually each December 31st. The market rate in effect when the bonds were issued was 7%. Assume the bonds were issued at 96 and have been amortized using the effective interest method through December 31, 2019. At that time, after recording the 12/31/19 interest payment, assume the balance in the bond discount account was $130,000. On June 30, 2020, DEF retired all the bonds by exercising the call feature. The call price was 101.
Required:
Prepare the journal entry for the call of the bonds on June 30, 2020. (Show your calculations).
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