The December 31, 2015, balance sheet of Ming Inc. included 12% bonds with a face

Question

The December 31, 2015, balance sheet of Ming Inc. included 12% bonds with a face amount of $105 million. The bonds were issued in 2005 and had a remaining discount of $3,900,000 at December 31, 2015. On January 1, 2016, Ming called the bonds at a price of 102.

Prepare the journal entry by Ming to record the retirement of the bonds on January 1, 2016. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)

Prepare the journal entry by Ming to record the retirement of the bonds on January 1, 2016. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)

Explanation / Answer

Hey Dear Student !!

In this Case Face Value of Total Bonds is given i.e. $105 million but face value of per bond is not given so I assume that Face Value of Per bond is $105.

During Retirement of Bonds following entries will be passed:-

Journal in the books of Ming Inc.

12% Bonds A/c ..Dr. 105000000
To Cash/Bank A/c. 102000000
To Discount on Redemption of Bonds. 3000000
(Being Bonds Retired)

Discount on Redemption of Bonds A/c ....Dr. 3000000
Profit & Loss A/c ...Dr. 900000
To Discount on
Issue of Bonds A/c. 3900000
(Being Discount written off)

Pleasure Teaching You !!

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.