Redemption of Bonds Prior to Maturity
Response to the following problem:
The Hill Corporation issued $1,500,000 of 11% bonds at 98 on January 2, 2008. Interest is paid semiannually on June 30 and December 31. The bonds had a 10-year life from the date of issue, and the company uses the straight-line method of amortization. On March 31, 2011, the company recalls the bonds at the call price of 107 plus accrued interest.
Required:
Prepare the journal entries to record the reacquisition (recall) of the Hill Corporation bonds.