Question

CALCULATOR FULL SCREEN PRINTER VERSION BACK NEX Question 14 Sergel Company issued $400,000 of bonds on January 1, 2020 Prepare the journal entry to record the redemption of the bonds at maturity, assuming the bonds were issued at 100. (Credit account titles are automatically indente when the amount is entered. Do not indent manually.) Account Tities and Explanation Debit Credit Prepare the journal entry to record the redemption of the bonds before maturity at 97. Assume the balance in Premium on Bonds Payable is $4,000. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit

Answer 1

Journal entry to record the redemption of the bonds at maturity, assuming the bonds were issued at 100. Credit Account Titles and Explanation Bonds Payable Cash Debit $400,000 [Bonds Payable's normal balance is credit and so debited now to redeem] (Cash goes out from firm and so Cash account is credited] $400,000 Journal entry to record the redemption of the bonds at maturity, assuming balance in Premium on Bonds Payable is $4,000. Credit Account Titles and Explanation Bonds Payable Premium on Bonds Payable Cash Gan on Redemption of Bonds Payable Debit $400,000 $4,000 $388,000 $16,000 [Bonds Payable's normal balance is credit and so debited now to redeem) [Premium on Bonds Payable's normal balance is credit and so debited now to redeem] Cash goes out from firm and so Cash account is credited --> $400000 x 97%] (Balancing figure --> ($400000 + $4000) - $388000 = $16000] Journal entry to record the conversion of the bonds into 15,000 shares of $10 par value common stock, assuming bonds were issued at par. Debit $400,000 Account Titles and Explanation Bonds Payable Common Stock Paid-in-capital in Excess of Par - Common Credit [Bonds Payable's normal balance is credit and so debited now to redeem) $150,000 [Common stock's normal balance is credit --> It is credited by 15,000 shares x $10 (Par)] $250,000 [Balancing figure --> $400000 - $150000 = $250000]