Hw CHAPTER 14 Bonds and Long-Term Notes 815 The balance sheet of Indian River El

Question

Hw CHAPTER 14 Bonds and Long-Term Notes 815 The balance sheet of Indian River Electronics Corporation as of Dec having a face amount of $90 million. The bonds had been issued in 2010 and had a remaining discount of $3 mil- lion at December 31, 2017. On January 1, 2018, Indian River Electronies called the bonds before their scheduled maturity at the call price of 102. Required: Prepare the journal entry by Indian River Electronics to record the redemption of the bonds at January 1,2018. ember 31, 2017, included 12.25% bonds

Explanation / Answer

Solution:

Journal Entries - Indian River Electronics Date Particulars Debit Credit 1-Jan-18 Bonds Payable Dr $90,000,000.00 Loss on redemption of bond Dr $4,800,000.00       To Cash ($90,000,000*102%) $91,800,000.00       To Discount on issue of bond $3,000,000.00 (To record redemption of bond before maturity)

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