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.

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)