Question

A $535,000 bond issue on which there is an unamortized discount of $38,000 is redeemed for $464,000. Journalize the redemption of the bonds.

If an amount box does not require an entry, leave it blank.

On the first day of the fiscal year, a company issues an $658,000, 9%, five-year bond that pays semiannual interest of $29,610 ($658,000 x 9% x 1/2), receiving cash of $618,500. Journalize the entry to record the first interest payment and the amortization of the related bond discount using the straight-line method.

If an amount box does not require an entry, leave it blank.

Answer 1

Credit Debit $535.000 Account Titles and Explanation Bonds Payable Gain on Redemption of Bonds Discount on Bonds Payable cash (Being redemption of the bonds recorded) $ 33,000 $ 38,000 $464,000 Working Notes: Gain on Redemption of Bonds = $535,000-$38.000-$464,000 = $33,000 Credit Debit S 33,560 Account Titles and Explanation Interest Expenses Discount on Bonds Payable Cash (Being interest expenses recorded) $ 3,950 $ 29,610 Working notes: Cash $618,500 Discount on bonds Payable $ 39,500 Bonds Payable $658,000 (Being bonds issued at discount recorded) Disount on bonds payable = $658,000-$618,500 = $39,500 Discount on bonds payable = $39.500/10 = $3,950