Question

The balance sheet of Indian River Electronics Corporation as of December 31, 2020, included 10.5% bonds having a face amount of $91.0 million. The bonds had been issued in 2013 and had a remaining discount of $4.0 million at December 31, 2020. On January 1, 2021, Indian River Electronics called the bonds before their scheduled maturity at the call price of 102. Required: Prepare the journal entry by Indian River Electronics to record the redemption of the bonds at January 1, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) X Answer is not complete. No Debit Credit Date General Journal January 01, 2021 Bonds payable Loss on early extinguishment Discount on bonds payable Cash

Answer 1

Date	accounts & explanation	debit	Credit
Jan 1,2021	Bonds payable	91,000,000
	Loss on early extinguishment	5,820,000
	Discount on bonds payable		4,000,000
	Cash (91,000,000*1.02)		92,820,000
	(To record redemption of bonds)

Cash = face value * call price /100 =91,000,000*1.02/100

or

Amt in Millions

Date	accounts & explanation	debit	Credit
Jan 1,2021	Bonds payable	91.000
	Loss on early extinguishment	5.820
	Discount on bonds payable		4.000
	Cash (91*1.02)		92.820
	(To record redemption of bonds)