Question

oma 2,050,000 of bonds on January 1, 2020 Prepare the male try to record a nce of the bonds they are (1) 100 (2) 97 and (3) 105. ( accountles Accounts and explanation Debit Credit Prepare mot indent um a try to record the redemption of the bonds at ma ly) n g theo 90. Cet accounts are automaty dered when amunt i fred. Do Accounties and Explanation Prepare the journal entry to record the redemption of the bonds before maturity when amount is entered. Do not indent may 97. Assume the balance in Premium on Bonds Payable is 99.000 Titles are automatically indented

Answer 1

Journal Entries:

No.	Account Titiles and Explanation	Debit	Credit
a)	Cash	$2,050,000
	Bonds Payable		$2,050,000
	(To record the issuance of bonds at face value)
b)	Cash ($2,050,000 - $61,500)	$1,988,500
	Discount on issue of bonds payable (100% - 97% = 3%*$2,050,000)	$61,500
	Bonds Payable		$2,050,000
	(To record the issuance of bonds at discount value)
c)	Cash ($2,050,000 + $102,500)	$2,152,500
	Bonds Payable		$2,050,000
	Premium on issue of bonds payable (105% - 100% = 5%*$2,050,000)		$102,500
	(To record the issuance of bonds at premium value)

Account Titiles and Explanation	Debit	Credit
Bonds Payable	$2,050,000
Cash		$2,050,000
(To record the redemption of bonds which were issued at face value)
Account Titiles and Explanation	Debit	Credit
Bonds Payable	$2,050,000
Premium on issue of bonds payable	$9,800
Cash ($2,050,000*97/100)		$1,988,500
Gain on Redemption of Bonds Payable ($2,050,000 + $9,800 - $1,988,500)		$71,300
(To record the redemption of bonds at discount when bonds were issued at premium)