Question

The following are two independent situations.

1.		Ivanhoe Corporation redeemed $135,300 face value, 12% bonds on June 30, 2020, at 109. The carrying value of the bonds at the redemption date was $120,300. The bonds pay annual interest, and the interest payment due on June 30, 2020, has been made and recorded.
2.		Tastove Inc. redeemed $147,000 face value, 14.50% bonds on June 30, 2020, at 93. The carrying value of the bonds at the redemption date was $149,000. The bonds pay annual interest, and the interest payment due on June 30, 2020, has been made and recorded.

For each independent situation above, prepare the appropriate journal entry for the redemption of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
1.
2.

Answer 1

S No	Date	Account Titles	Debit	Credit
1	June 30	Bonds Payable	135300
		Loss on bond redemption [bal. fig.]	27177
		Cash [135300* 109%]		147477
		Discount on bonds payable [135300-120300]		15000
2	June 30	Bonds Payable	147000
		Premium on bonds payable [149000-147000]	2000
		Cash [147000*93%]		136710
		Gain on bond redemption [bal. fig.]		12290