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15 April, 04:41

Bramble Corp. redeemed $118,000 face value, 9% bonds on April 30, 2022, at 102. The carrying value of the bonds at the redemption date was $106,554. The bonds pay annual interest, and the interest payment due on April 30, 2022, has been made and recorded.

Required:

Prepare the appropriate journal entry for the redemption of the bonds.

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Answers (1)
  1. 15 April, 08:26
    0
    The journal entry is shown below:

    Explanation:

    According to the scenario, the computation for the given data are as follows:

    Cash = face value * 102%

    = $118,000 * 102% = $120,360

    Loss on bond = $120,360 - $106,554 = $13,806

    Discount payable on bonds = $118,000 - $106,554 = $11,446

    Interest expense = $118,000 * 9% = $10,620

    So, the journal entry for the given data are as follows:

    Apr. 30 Bonds Payable A/c Dr $118,000

    Loss on bonds A/c Dr. $13,806

    To Cash A/c $120,360

    To Discounts payable A/c $11,446

    (Being redemption of bonds at 102 is recorded)

    Interest expense A/c Dr $10,620

    To bond interest A/c $10,620

    (Being bond interest is recorded)

    Bond Interest A/c Dr $10,620

    To cash A/c $10,620

    (Being bond interest payment is recorded)
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Home » Business » Bramble Corp. redeemed $118,000 face value, 9% bonds on April 30, 2022, at 102. The carrying value of the bonds at the redemption date was $106,554.
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