Answer:
bonds payable 134,000 debit
loss on redemption 17,018 debit
cash 138,020 credit
discount on bonds payabke 12,998 credit
Explanation:
<u><em>redemption disbursement:</em></u>
face value x redemption quote
134,000 x 103/100 = <em>138,020</em>
<u><em>carrying value:</em></u> <u>121,002</u>
loss at redemption 17,018
We are using 138,020 cash(asset) to pay a liability for 121,002
<u>discount/premium on the bonds:</u>
face value 134,000
carrying value <u>121,002</u>
discount: 12,998
In the journal entry we must write-off the bond payable and the discount. Then, declare the loss at redemption and the cash used.
