Chrome File Edit View History Bookmarks People Window Help 84% 0, Wed 10:46 AM E

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Chrome File Edit View History Bookmarks People Window Help 84% 0, Wed 10:46 AM E CengageNOWv2 Online teaching and learning resource from Cengage Learning v2.cengagenow.com/ilrn/takeAssignment takeAssignmentMain.doPinvokers&takeAssignmentSessionLocator;=assignment-takeBinprogress-false Chapter 11 Assignment 1. BE.1101 2. BE.11-03 eBook Show Me How Calculator Redemption of Bonds Payable A $860,000 bond issue on which there is an unamortized premium of $74,000 is redeemed for $792,000 Journalize the redemption of the bonds. If an amount box does not require an entry, leave it blank. 3. BE.11-06.ALGOO 4. EX.11-05 ALGO 5. EX.11-010.AP.1 ALGO 6. PR.11-02.ALGO 7. PR.11-04.AP.1 AND.AP.2.AL... Check My Work Previous Next Progress: 3/7 items 29

Explanation / Answer

Face value of bond is $ 860,000

Unamortized premium = $74,000

Redemption price = $792,000

Carrying amount of bond is the face value plus premium or less discount if any

in the given scenario carrying amount of bonds is 934,000 (860,000 + 74,000)

Cash paid to redeem the bonds is less than the carrying amount and hence the gain on early redemption is to be recognised

Journal entry is

Bonds payable A/C 860,000 Premium on bonds A/C 74,000 To Bank A/C 792,000 To Gain on retirement of bonds 142,000

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