Answer:
Explanation:
The journal entries are shown below:
(1) Cash A/c Dr $200,000
To Bond payable A/c $200,000
(Being bond is issued for cash)
(2) Interest expense A/c Dr $12,000 ($200,000 × 6%)
To Interest payable A/c $12,000
(Being accrued interest adjusted)
(3) Bond payable A/c Dr $200,000
Premium on retirement of bond A/c Dr $4,000
To Cash A/c $204,000 ($200,000 × 102%)
(Being the early retirement of the bonds is recorded)