Question

The balance sheet of Indian River Electronics Corporation as of December 31, 2015, included 11.5% bonds having a face amount of $91.4 million. The bonds had been issued in 2008 and had a remaining discount of $4.4 million at December 31, 2015. On January 1, 2016, Indian River Electronics called the bonds before their scheduled maturity at the call price of 103.

Required:

Prepare the journal entry by Indian River Electronics to record the redemption of the bonds at January 1, 2016. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)

Answer 1

Answer

Date	Accounts title	Debit	Credit
01-Jan-16	Bonds Payable	$91,400,000
	Loss on redemption of Bonds	$7,142,000
	Discount on Bonds Payable		$4,400,000
	Cash ($91.4 millions x 103/100)		$94,142,000
	(to record redemption of Bonds)