The December 31, 2005, balance sheet of Far Imports includes the following items:
The bonds were issued on December 31, 2004, at 97, with
Interest payable on June 30 and December 31 of each year.
On January 2, 2007, Far Imports retired $400,000 of these
bonds at 98.
Prepare the journal entries to record retirement of the bonds,
Including accrual of interest since the last payment and
amortization of the discount.
9% bonds payable due 12/31/2014................................$800,000
Discount on bonds payable.................................... 22,472