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27 July, 05:54

On January 1, 2017, Henderson Corporation redeemed $500,000 of bonds at 99. At the time of redemption, the unamortized premium was $15,000. Prepare the corporation's journal entry to record the reacquisition of the bonds. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 6 decimal places, e. g. 1.251247 and final answer to 0 decimal places, e. g. 38,548.)

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  1. 27 July, 09:23
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    bonds payable 500,000

    premium on bonds payable 15,000

    cash 495,000

    gain on redemption 20, 000

    Explanation:

    cash disbursements to rescue the bonds:

    500,000 x 99/100 = 495,000

    carrying value:

    bonds payable 500,000

    premium 15,000

    total 515,000

    gain on redemption:

    cash disbursements to rescue the bonds: - carrying value:

    515,000 - 495,000 = 20,000
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