Question

Acompanyret ed $85million of its 5% bonds at 104 $88.4 million) before their scheduled maturity. At the time, the bonds had a remaining discount of $3 million. the journal entry to record the redemption of the bonds. (Enter your answers in millions rounded to 1 decimal place(i.e. should be entered as 5.5). If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the redemption of the bonds. Note: Enter debits before credits General Journal Debit Credit Event Record entry Clear entry View general journal

Answer 1

Event	Accounts title	Debit	Credit	Working explanation
1	Bonds Payable	$                    85.0		[Face value]
	Loss on redemption/retirement of Bonds	$                       6.4		[88.4 + 3 - 85]
	Discount on Bonds Payable		$                      3.0	[remaining debit balance, now credited]
	Cash		$                    88.4	[Cash paid on retirement]
	(Bonds payable redeemed)

Note: Loss on retirement = Cash paid on retirement - Carrying Value of Bonds Payable
= Cash paid - (Face value - Discount)
= 88.4 - (85 - 3)
= 88.4 - 82
= 6.4