Present Entries to Record the Selected Transactions Described Below

question 44

Essay

Present entries to record the selected transactions described below.
(a)Issued $2,750,000 of 10-year, 8% bonds at 97.
(b)Amortized bond discount for a full year, using the straight-line method.
(c)At the end of the third year, called bonds at 98. The bonds were carried at $2,692,250 at the time of the redemption.

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Definitions:

Liability Account

An account on the balance sheet representing obligations to pay money or deliver goods or services to another party in the future.

Tornado Damage

The destruction or damage caused to structures, lands, and properties as a result of a tornado, a rapidly rotating column of air in contact with both the surface of the Earth and a cumulonimbus cloud or, in rare cases, the base of a cumulus cloud.

Uninsured Plant

Property, machinery, or industrial facilities not covered by insurance against loss or damage.

Extraordinary Item

Rare and significant events that are both unusual and infrequent in nature, whose financial effects are separated out on a company's income statement to provide clearer results.