On September 10, 2009, Mooney Plastic Products issued bonds with a face value of $500,000 for a price of 96. During 2012, Mooney exercised a call provision and redeemed the bonds for 101. At the time of the redemption, the bonds had a balance sheet value of $490,000.
a. Prepare the journal entry to record the redemption.
b. Assume that the bonds were issued in 2009 for 102, and at the time of redemption they had a balance sheet value of $507,000. Prepare the journal entry to record the bond redemption.