Question

On December 31, a $500,000 bond issue on which there is an unamortized premium of $67,000 is redeemed for $490,000. Journalize the redemption of the bonds. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Answer:

Dr Bonds Payable $500,000

Dr Premium on Bonds Payable $67,000

Cr Gain on Redemption of Bonds $77,000

Cr Cash $490,000

Explanation:

Preparation of the journal entry to Record the redemption of the bonds

Dr Bonds Payable $500,000

Dr Premium on Bonds Payable $67,000

Cr Gain on Redemption of Bonds $77,000

($500,000 + $67,000 - $490,000)

Cr Cash $490,000

(To record redemption of bonds)