Answer:
The journal entry is given below:
Explanation:
According to the scenario, the computation for the given data are as follows:
Bonds payable premium = Carrying value - Face value
= $171720 -$159,000 = $12,720
Cash = Face Value × 95% = $159,000 × 95% = $151,050
So,Redemption gain = Carrying value - Cash
= $171,720 - $151,050 = $20,670
So, the Journal entry for the given data are as follows:
Bonds Payable A/c Dr. $159,000
Bonds Payable premium A/c Dr. $12,720
To Redemption gain A/c $20,670
To Cash A/c $151,050