Marker Musical Products issued bonds with a face value of $100,000 and an annual stated interest rate of 8 percent on January 1, 2009. The effective interest rate on the bonds was 10 percent. Interest is paid semiannually on July 1 and January 1. As of December 31, 2011, the company reported the following dollar amounts for these bonds:
Marker Musical Products retired the bonds on July 2, 2012, by repurchasing them for $91,700 in cash.
a. Provide the journal entry recorded on July 1, 2012, when the interest payment is made.
b. Prepare the journal entry to record the retirement of the bonds.