Question

The long-term liability section of Twin Digital Corporation's balance sheet as of December 31, 2015, included 10% bonds having a face amount of $25 million and a remaining discount of $1 million. Disclosure notes indicate the bonds were issued to yield 12%. Interest expense is recorded at the effective interest rate and paid on January 1 and July 1 of each year. On July 1, 2016, Twin Digital retired the bonds at 102 ($25.5 million) before their scheduled maturity. Required: Prepare the necessary journal entries for Twin Digital on July 1, 2016. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field. Enter your answers in whole dollar.)