E14-15 (Entries for retirement and issuance of Bonds)

On june 30, 2002, Mendenhal Company issued 8% bonds with a par value of $600.000 due in
20 years. They wew issued at 82.8414 to yield 10% and were callable at 104 at any date after
june 30, 2010. Because of lower interest rates and significant change in the companys credit
rating, it was decided to call the entire issue on june 30, 2011 and to issue new bond. New 6%
bonds were sold i the amount of $800.000 at 112.5513 to yield 5% they mature in 20 years.
Interest payment dates are december 31 and june 30 for both old and new bonds.
Insturctions
1. Prepare journal entries to record the retirement of the old issue and the sale of the new
issueon june 30, 2011 unamorized discount is $78,979
2. Prepare the entry required on december 31,2011 to record the payment of the first 6
months interest and the amortization of premium on the bonds.
E14-16 (Entries fore retirement and Issuance of Bonds)
Kobiachi Company had bond outstanding with maturity value of 5,000,000 Yen. On April 30,
2011, when these bonds had an unamorizeed discoun of 100,000 Yen, they were called in at
104. To pay for these bonds, Kobiaci had issuedd other bonds a month earlier bearing a lower
interest rate. The newly issued bond had a life of 10 years. The new bonds were issued at
103(face value 5,000,000 Yen)
Instructions
Ignoring interest, compute the gain or loss and record this refunding transaction