Question

Oriole Company issued $476,000 of 10-year bonds at a discount. Prior to maturity, when the carrying value of the bonds was $454,580, the company redeemed the bonds at 97. Prepare the entry to record the redemption of the bonds.

Answer 1

Date Account and Explanation Debit Credit

Bonds payable $476,000

Loss on bond redemption $7,140

(461,720 - 454,580)

Cash $461,720

(476,000 * 0.97)

Discount on bonds payable $21,420

(476,000 - 454,580)

(To record redemption of the bonds)