Homework Answers
Journal
|
Date |
Account title |
Debit |
Credit |
|
Bonds payable |
1,000,000 |
||
|
Loss on bonds redemption |
66,000 |
||
|
Discount on bonds payable |
16,000 |
||
|
Cash |
1,050,000 |
Redemption price = Par value of bonds + Call premium
= 1,000,000 + 1,000,000 x 5%
= 1,000,000 + 50,000
= $1,050,000
Unamortized Discount on bonds payable = Par value of bonds - Carrying value of bonds
= 1,000,000 - 984,000
= $16,000
Loss on bonds redemption = Redemption price – Carrying value of bonds
= 1,050,000 - 984,000
= $66,000
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