Ask Question
16 February, 02:37

The situations presented here are independent of each other. For each situation, prepare the appropriate journal entry for the redemption of the bonds. Pelfer Corporation redeemed $160,000 face value, 10% bonds on April 30, 2014, at 105. The carrying value of the bonds at the redemption date was $144,571. The bonds pay annual interest, and the interest payment due on April 30, 2014, has been made and recorded. 2-Youngman, Inc., redeemed $250,400 face value, 14.3% bonds on June 30, 2014, at 96. The carrying value of the bonds at the redemption date was $271,021. The bonds pay annual interest, and the interest payment due on June 30, 2014, has been made and recorded.

+5
Answers (1)
  1. 16 February, 05:33
    0
    Answer and Explanation:

    The Journal entry is shown below:-

    1. Bonds payable Dr, $160,000

    Loss on bond redemption Dr, $23,429

    ($160,000 * 1.05 - $144,571)

    To Discount on bond payable $15,429

    ($160,000 - $144,571)

    To Cash $168,000

    ($160,000 : 100 * 105)

    (Being redemption of bonds is recorded)

    2. Bonds payable Dr, $250,400

    Premium on bond payable Dr, $20,621

    ($271,021 - $240,384)

    To Gain on bond redemption $30,637

    ($271,021 - $240,384)

    To Cash $240,384

    ($240,384 : 100 * 96)

    (Being redemption on bonds is recorded)
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “The situations presented here are independent of each other. For each situation, prepare the appropriate journal entry for the redemption ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers