E10-18 Recording the Early Retirement of a Bond Issued at a Discount (with Disco

Question

E10-18 Recording the Early Retirement of a Bond Issued at a Discount (with Discount Account) LO10-7 Several years ago, Nicole Company issued bonds with a face value of $1,000,000 for $945,000. As a result of declining interest rates, the company has decided to call the bond at a call premium of 5 percent over par. The bonds have a current book value of $984,000. Record the retirement of the bonds, using a discount account. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) vlew transaction list Journal entry worksheet Record the retirement of the bonds. Note: Enter debits before credits. Transaction Debit Credit 1,000,000 40,000 10,000 Bonds payable on bond call remium on bonds payable Cash 1,050,000 Record entry Clear entry View general journal

Explanation / Answer

Transaction General Journal Debit Credit 1. Bonds payable $1,000,000 Loss on retirement of bonds $66,000 Discount on Bonds payable $16,000 Cash $1,050,000

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