ABC company issued callable bonds with a par value of $280,000. If the company calls the bonds early they must pay a call premium equal to $950 in addition to the par value of the bonds. The bonds pay interest semi-annually on June 30 and Dec 31 of each year for 7 years. Current economic conditions make it favorable for the company to call the bonds before the maturity date. On July 1 of year 3 of the bonds the company decides to exercise their option to call the bonds. The bonds have a carrying value of $284,400 at the time the bonds are called. Prepare the journal entry ABC company will record in their accounting records on July 1 when the bonds are called.
| Date | Description | Debit | Credit |
|---|---|---|---|
| 07/01 | |||
| 07/01 | |||
| 07/01 | |||
| 07/01 | |||
| 07/01 | to record the call of bonds before their maturity date. | ||