Sheridan Company retires its $380000 face value bonds at 105 on January 1, following the payment...
Sheridan Company retires its $380000 face value bonds
at 105 on January 1, following the payment of interest. The
carrying value of the bonds at the redemption date is $394231. The
entry to record the redemption will include a
a. debit of $19000 to Premium on Bonds Payable.
b. credit of $4769 to Gain on Bond Redemption.
c. credit of $14231 to Loss on Bond Redemption.
d. debit of $14231 to Premium on Bonds Payable.
Homework Answers
Journal entry
| Date | account and explanation | Debit | Credit |
| Bonds payable | 380000 | ||
| Premium on bonds payable | 14231 | ||
| Loss on bonds payable | 4769 | ||
| Cash (380000*1.05) | 399000 | ||
So answer is d) Debit of $14231 to premium on bonds payable
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