Answer:
bonds payable 1,200,000
interest payable 30,000
loss on redemption 162,000
cash 1,224,000
discount on bonds 168,000
to record redemption of the bonds at 102
Explanation:
To know the gain or loss on redemption we will compare the cash disbursement wiht the carrying value fo the bonds
the vbonds are rescue at 102 which means 102% of the face value:
1,200,000 x 102/100 = 1,224,000 cash disbursement
<u>carrying value of the bonds:</u>
1,200,000 - 168,000 discount + 30,000 interest payable = 1,062,000
loss on redemption: 1,224,000 - 1,062,000 = 162,000
we will write-off the bonds related account and credit cash by the amount paid.
