Question

Exercise 14-15 Marigold Company had bonds outstanding with a maturity value of $272,000. On April 30, 2017, when these bonds had an unamortized discount of $10,000, they were called in at 106. To pay for these bonds, Marigold had issued other bonds a month earlier bearing a lower interest rate. The newly issued bonds had a life of 10 years. The new bonds were issued at 103 (face value $272,000) Ignoring interest, compute the gain or loss. Loss on redemption Ignoring interest, record this refunding transaction. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually Account Titles and Explanation Debit Credit (To record redemption of bonds payable) (To record issuance of new bonds)

Answer 1

Loss on redemption = (272000*1.06)-(272000-10000) = 26320

Journal entry

Date	account and explanation	debit	credit
Apr 30,2017	Bonds payable	272000
	Loss on redemption of bonds	26320
	Discount on bonds payable		10000
	Cash		288320
	(To record redemption)
	Cash	280160
	Bonds payable		272000
	Premium on bonds payable		8160
	(To record bond issue)