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QveST [7]
2 years ago
6

On July 1, Aloha Co. exercises a call option that requires Aloha to pay $224,400 for its outstanding bonds that have a carrying

value of $228,200 and a par value of $220,000. The company exercises the call option after the semiannual interest is paid the day before on June 30. Record the entry to retire the bonds.
Business
1 answer:
skelet666 [1.2K]2 years ago
3 0

Answer:

Date                 Account title                                              Debit             Credit

July 1                Bonds Payable                                      $220,000

                        Premium on Bonds Payable                  $8,200

                        Cash                                                                            $224,400

                        Gain on retirement of bond                                       $3,800

<u />

<u>Working:</u>

Premium = Carrying value - Par value

= 228,200 - 220,000

= $8,200

Gain on retirement of bond = Carrying amount - Amount paid:

= 228,200 - 224,400

= $3,800

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Assuming  the bonds are sold at par value, the issuer will records the sale with a debit to: Cash $100,000.

<h3>Journal entry</h3>

Based on the information given if the company issues the amount of  $100,000 of 5%, 10-year bonds dated january 1 the appropriate journal entry to record this transaction is:

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Learn more about journal entry here:brainly.com/question/14279491

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