Answer:
For recording the bond retirement we debited the bonds payable, loss on bonds retirement and discount on bonds payable and credited the cash.
Explanation:
Bonds payable Dr, $250,000
Loss on bonds retirement Dr, $7,000
Discount on bonds payable Dr, $2,000
To Cash $255,000
(Being redemption of bonds is recorded)
Working Note:-
Issue price of bonds
($250,000 × 100 × 98) $245,000
Face value $250,000
Discount on bonds $5,000
Discount amortized $3,000
Unamortized Discount $2,000
Redemption price
($250,000 ÷ 100 × 102) $255,000
