Question

XYZ Corporation produces and sells smartphone cases. On March 31, XYZ Corporation had the following accounts and balances: Bonds payable $140,000 Discount on bonds payable 3,000 On that day, XYZ Corporation redeemed a quarter of the bonds in the market at 101. Prepare the journal entry to record the redemption. Show your calculation in the space provided below the journal entry lines for any credit to be awarded. Round to the nearest whole dollar when necessary.

Answer 1

Requirement: Prepare the following journal entry

Date	Account Title and Explanation	Debit	Credit
Mar 31	Bonds Payable	$140,000
	Loss on Bond Redemption	$4,400
	Discount on Bonds Payable		$3,000
	Cash ($140,000 × 1.01)		$141,400
	To record redemption of bonds payable

Note: Compute loss on bond redemption as follows

Particulars	Amount
Cash paid on redemption ($140,000 × 101%)	$141,400
Add: Unamoritized discount on bonds payable	$3,000
	$144,400
Deduct: Bonds payable	($140,000)
Loss on bonds redemption	$4,400