Question

7:20 PM Wed Jan 29 C15 #1 Weygandt, Accounting Principles, 13e Help System Announcements - NEXT Exercise 15-08 The following are two independent situations. 1. Sunland Corporation redeemed $135,500 face value, 10% bonds on June 30, 2020, at 106. The carrying value of the bonds at the redemption date was $124,500. The bonds pay annual interest, and the interest payment due on June 30, 2020, has been made and recorded. 2. Tastove Inc. redeemed $143,000 face value, 18.50% bonds on June 30, 2020, at 98. The carrying value of the bonds at the redemption date was $145,000. 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.) Ne. Account Titles and Explanation Debit Credit 1. Bonds Payable Discount on Bonds Payable 135500 13550 11000 Loss on Bond Redemption Cash 124500 Click if you would like to Show Work for this question: Open Show Work Question Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWEF

Answer 1

1.Answer:

No.	Account title and Explanation	Debit	Credit
1	Bonds payable (face value)	$135,500
	Loss on bonds redemption	$19,130
	Discount on bonds payable (unamortized)		$11,000
	Cash		$143,630
	[To record redemption of bonds]

Calculations:

i.Unamortized discount on bonds payable:

Face value of the bonds	$135,500
(Less): Carrying value of the bonds	($124,500)
Unamortized discount	$11,000

ii. Cash paid. If redeemed at $106:

Cash paid = Face value x 1.06

=$135,500 x 1.06

=$143,630

2.Answer:

No.	Account title and Explanation	Debit	Credit
2	Bonds payable (face value)	$143,000
	Premium on bonds payable (unamortized)	$2,000
	Cash (143,000 x 0.98)		$140,140
	Gain bond redemption		$4,860
	[To record redemption of bonds]

Calculations:

i. Unamortized premium:

Carrying value of the bonds	$145,000
(Less): Face value of the bonds	($143,000)
Unamortized premium	$2,000

ii. Cash paid. If redeemed at $98:

Cash paid = Face value x 0.98

=$143,000 x 0.98

=$140,140