Robbins Corp. produces and sells wind-energy-driven engines. To finance its operations

Robbins Corp. produces and sells wind-energy-driven engines. To finance its operations, Robbins Corp. issued $30,000,000 of 20-year, 10% callable bonds on March 1, 2014, with interest payable on March 1 and September 1. The fiscal year of the company is the calendar year. Journalize the entries to record the following selected transactions:

2014

Mar. 1. Issued the bonds for cash at their face amount.

Sept. 1. Paid the interest on the bonds.

2020

Sept. 1. Called the bond issue at 98, the rate provided in the bond indenture.
(Omit entry for payment of interest.)


Answer:

2014
Mar. 1 Cash 30,000,000
Bonds Payable 30,000,000
Sept. 1 Interest Expense 1,500,000
Cash 1,500,000
2020
Sept. 1 Bonds Payable 30,000,000
Gain on Redemption of Bonds 600,000
Cash* 29,400,000
* $30,000,000 × 0.98