Effective April 1, 2004, The Bloomington Corporation, which has a December 31st year-end, authorized $1,500,000 of callable, mortgage bonds (secured by $2,200,000 of property and equipment, at market value).
The bonds paid interest at rate of 8% per year and had a term of 6 years. Interest was payable each September 30th and March 31st. On July 1, 2005, Bloomington issued 1,000 of the bonds in exchange for $906,000 in cash. On October 1, 2007, Bloomington called the bonds, and paid the existing bond holder a $1,150,000 in cash.
Prepare the journal entries related to the bonds that Bloomington made for the period April 1, 2004 through December 31, 2005. In addition, prepare the journal entry the company made it redeemed the bonds in October 2007.