Question

Casey Company retired $500,000 face value, 9% bonds on June 30, 2021 at 96. The carrying value of the bonds at the redemption date was $508,000. Prepare the journal entry to record the redemption of the bonds.

Answer 1

Based on the information given the appropriate journal entry to record the redemption of the bonds is:

Casey Company  Journal entry

June 30, 2021

Debit Bonds payable                     $500,000  

Debit Premium on bonds payable $8,000

($508,000-$500.000)

Credit Gain on bond redemption  $28,000

($508,000 - $480,000)

Credit Cash                                   $480,000

($500,000 x 96%)

(To record redemption of the bonds)

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