Question - Hurley Co. has outstanding $6.5 million face amount of 11% bonds that were issued on January 1, 2004, for $6,272,500. The 20-year bonds mature on December 31, 2023, and are callable at 105 (that is, they can be paid off at any time by paying the bondholders 105% of the face amount).
b-1. Assume that the bonds are called on December 31, 2016. Use the horizontal model to show the effect of the retirement of the bonds. (Use amounts with + for increases and amounts with - for decreases.)
b-2. Assume that the bonds are called on December 31, 2016. Record the journal entry to show the effect of the retirement of the bonds.