can you show .me how to work this, not just the answer but how to work...
can you show .me how to work this, not just the answer but how to work through it so i know thank .
Early retirement of bonds Eaton company issued 600000 of 8% 20 year bonds at 106 on January 1 2013. Interest is payable semiannually on july 1st and Jan 1st. Through Jan 1 2019 Eaton amortized 5,000 of the bond premium. On Jan 1st 2019 Eaton retired the bond at 103 after making the interest payment on that date. Prepare the journal statement for retiring that bond on Jan 1st 2019.
Thank you
Homework Answers
Solution:
Issue price of bond = $600,000 * 106% = $636,000
Premium on issue of bond = $636,000 - $600,000 = $36,000
Unamortized premium on 01.01.2019 = $36,000 - $5,000 = $31,000
Retirement value of bond = $600,000*103% = $618,000
| Journal Entries - Eaton Company | |||
| Date | Particulars | Debit | Credit |
| 1-Jan-19 | Bond Payable Dr | $600,000.00 | |
| Premium on bond payable Dr | $31,000.00 | ||
| To Cash | $618,000.00 | ||
| To Gain on redemption of bond | $13,000.00 | ||
| (To record early retirement of bond) | |||
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