Question

Need assistance with parts of section C, please

Analyzing Financial Statement Effects of Bond Redemption

Holthausen Corporation issued $100,000 of 11%, 20-year bonds at 108 on January 1, 2010. Interest is payable semiannually on June 30 and December 31. Through January 1, 2016, Holthausen amortized $1,048 of the bond premium. On January 1, 2016, Holthausen retires the bonds at 103.

Required
a. Prepare journal entries to record the issue and retirement of these bonds.

General Journal
Date	Description	Debit	Credit
01/01/10	CASH	108000	0
	Bonds payable	0	100000
	Bond premium	0	8000
01/01/16	Bonds payable	100000	0
	Bond premium	6952	0
	Cash	0	103000
	Gain on retirement	0	3952

b. Post the journal entries from part a to their respective T-accounts.

Cash (A)
01/01/10	108000	0
01/01/16	0	103000

Bonds Payable (L)
01/01/10	0	100000
01/01/16	100000	0

Gain on Retirement of Bonds (R)
01/01/10	0	0
01/01/16	0	3952

Bond Premium (L)
01/01/10	0	8000
01/01/16	6952	0

c. Record each of the transactions from part a in the financial statement effects template. Remember to use negative signs, when appropriate.

	Balance Sheet									Income Statement
Transaction	Cash Asset	+	Noncash Asset	=	Liabilities	+	Contrib. Capital	+	Earned Capital	Revenues	-	Expenses	=	Net Income
1/1/10 Issue bonds at a premium	108000	+	0	=	Answer	+	0	+	Answer	0	-	0	=	0
1/1/16 Retire bonds issued on 1/1/10	(103000)	+	0	=	Answer	+	0	+	Answer	Answer	-	0	=	Answer

Answer 1

c.

	Balance Sheet									Income Statement
Transaction	Cash Asset	+	Noncash Asset	=	Liabilities	+	Contrib. Capital	+	Earned Capital	Revenues	-	Expenses	=	Net Income
1/1/10 Issue bonds at a premium	108000	+	0	=	108000	+	0	+	0	0	-	0	=	0
1/1/16 Retire bonds issued on 1/1/10	-103000	+	0	=	-106952	+	0	+	3952	3952	-	0	=	3952