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18 February, 13:17

On January 1, 2020, Pharoah Corporation redeemed $640,000 of bonds at 99. At the time of redemption, the unamortized premium was $19,200. Prepare the corporation's journal entry to record the reacquisition of the bonds.

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  1. 18 February, 13:50
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    The Journal entry is as follows:

    Bonds Payable A/c Dr. $640,000

    Premium on Bonds Payable A/c Dr. $19,200

    To Gain on Redemption of Bonds $25,600

    To Cash $633,600

    (To record the re-acquisition of the bonds)

    Working notes:

    Cash = $640,000 * 0.99

    = $633,600
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