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Prepare the journal entries

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Question - Prepare the journal entries for the following two independent situations:

(a) On January 1, 2018, Hanover Corporation issued $400,000, 10%, 10-year bonds at 96. The bonds were sold to yield an effective-interest rate of 12%. Prepare the journal entry that Hanover Corporation would make on January 1.

(b) Mustard, Inc. redeemed $540,000 of its bonds at 100 ¼ on June 30, 2018, and immediately retired them. The carrying value of the bonds on the retirement date was $525,500. The bonds pay semiannual interest and the interest payment due on June 30, 2018 has been made and recorded. Prepare the journal entry to record the retirement of these bonds.

Reference no: EM132221324

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