Answer:
Dr Bonds payable $90,000,000
Dr Loss on bond redemption $4,800,000
Cr Bank $91,800,000
Cr Bond discount $3000,000
Explanation:
Upon redemption of the bond,the bond payable is debited with the face value of the bond of $90 million,discount account is credited with $3 million and payment made is credited to bank at $91.8 million($90 m*$102/$100).Hence the balancing figure is loss incurred from redeeming the bond prematurely.
The bond payable was credited early when the bond was issued to show an obligation of $90 million was owed to bondholders,hence upon repayment, the same account is debited to signify the discharge of the obligation.
Also,the bank account is credited since the organization parted with the sum of $91.8 million, a reduction in asset.
