Answer:
Bonds Payable 300,000 debit
Loss on redemption- Bonds Payable 22,000 debit
Cash 312,000 credit
Discount on Bonds Payable 10,000 credit
--to record the reemption of old-bonds--
Explanation:
<em>call price</em> = 300,000 x 104/100 = <em>312,000</em>
Bond payable (net) 300,000 - 10,000 = 290,000
Loss at redemption 22,000
We should recognize a loss as we are paying for the bonds 312,000 dollars while they are worth 290,000
To do the entry, we will write-off the bonds payable and the discount on bonds account. Wer will credit the cash used on the redemption and debit the expense.
