On March 1, 2014, Minnow Corporation issued $600,000 of 10 percent, five- year bonds. The semiannual interest payment dates are February 28 and August 31. Because the market rate for similar investments was 11 percent, the bonds had to be issued at a discount. The discount on the issuance of the bonds was $24,335. The company's fiscal year ends February 28. Prepare the journal entries to record the bond issue on March 1, 2014, the payment of interest, and the amortization of the discount on August 31, 2014 and on February 28, 2015. Use the effective interest method. (Round to the nearest dollar.)
Bond Retirement
Freed Corporation has outstanding $800,000 of 8 percent bonds callable at 104. On September 1, immediately after recording the payment of the semiannual interest and the amortization of the discount, the unamortized bond discount equaled $21,000. On that date, $480,000 of the bonds was called and retired.
1. How much cash must be paid to retire the bonds?
2. Is there a gain or loss on retirement, and if so, how much is it?