Question

Journal entry worksheet 1 2 Record the retirement of the bonds assuming the bonds have a carrying value of $31,500 Note: Enter debits before credits. Date General Journal Debit Credit July 01 Record entry View general journal Clear entry
Tyrell Company issued callable bonds with a par value of $40,000. The call option requires Tyrell to pay a call premium of $500 plus par (or a total of $40,500) to bondholders to retire the bonds. On July 1, Tyrell exercises the call option. The call option is exercised after the semiannual interest is paid the day before on June 30. Record the entry to retire the bonds under each separate situation. 1. The bonds have a carrying value of $31,500. 2. The bonds have a carrying value of $41,000.

Answer 1

Answer

--Requirement 1

Date	Accounts title	Debit	Credit
01-Jul	Bonds Payable	$40,000
	Loss on redemption of Bonds	$9,000
	Discount on Bonds Payable [$40000 - 31500]		$8,500
	Cash		$40,500

--Requirement 2

Date	Accounts title	Debit	Credit
01-Jul	Bonds Payable	$40,000
	Premium on Bonds Payable [$41000 - 40000]	$1,000
	Gain on redemption of Bonds		$500
	Cash		$40,500