On July 1,2014,Club Country Golf Corp. issued $20,000,000 of five-year,12%,semi-annual bonds for $20,075,000. At time of issue,Club Country paid its investment bank a $75,000 sales commission. On July 31,2017,Club Country calls $12,000,000 of the bonds,paying 104 plus accrued interest,and retires them. On March 31,2018,Club Country purchases the remaining bonds on the open market for $8,180,000 including accrued interest and retires them. Club Country's year-end is August 31. The company does not use reversing entries.
Requirements:
a. Prepare journal entries to record:
b. Provide a brief explanation as to the most likely reasons that Club Country was able to repurchase its bonds at a discount.

Question

On July 1,2014,Club Country Golf Corp. issued $20,000,000 of five-year,12%,semi-annual bonds for $20,075,000. At time of issue,Club Country paid its investment bank a $75,000 sales commission. On July 31,2017,Club Country calls $12,000,000 of the bonds,paying 104 plus accrued interest,and retires them. On March 31,2018,Club Country purchases the remaining bonds on the open market for $8,180,000 including accrued interest and retires them. Club Country's year-end is August 31. The company does not use reversing entries.
Requirements:
a. Prepare journal entries to record:
  b. Provide a brief explanation as to the most likely reasons that Club Country was able to repurchase its bonds at a discount.

Quizplus · Accepted Answer

The Answer of On July 1,2014,Club Country Golf Corp. issued $20,000,000 of five-year,12%,semi-annual bonds for $20,075,000. At time of issue,Club Country paid its investment bank a $75,000 sales commission. On July 31,2017,Club Country calls $12,000,000 of the bonds,paying 104 plus accrued interest,and retires them. On March 31,2018,Club Country purchases the remaining bonds on the open market for $8,180,000 including accrued interest and retires them. Club Country's year-end is August 31. The company does not use reversing entries.
Requirements:
a. Prepare journal entries to record:
  b. Provide a brief explanation as to the most likely reasons that Club Country was able to repurchase its bonds at a discount.