Prepare journal entries for redemption of bonds.
The situations presented here are independent of each other.
Instructions:
For each situation prepare the appropriate journal entry for the redemption of the bonds.
1) Thunder Corporation retired $130,000 face value, 12% bonds on June 30, 2007, at 102. The carrying value of the bonds at the redemption date was $122,500. The bonds pay annual interest, and the interest payment due on June 30, 2007, has been made and recorded.
2) Lightning, Inc., retired $180,000 face value, 12.5% bonds on June 30, 2007, at 98. The carrying value of the bonds at the redemption date was $184,000. The bonds pay annual interest, and the interest payment due on June 30, 2007, has been made and recorded.