Question

The situations presented here are independent of each other. For each situation, prepare the appropriate journal entry for the redemption of the bonds.

Marigold Corp. redeemed $128,000 face value, 9% bonds on April 30, 2022, at 101. The carrying value of the bonds at the redemption date was $115,584. The bonds pay annual interest, and the interest payment due on April 30, 2022, has been made and recorded.

Answer 1

Apr 30

Dr Bonds payable 128,000

Dr Loss on redemption of bonds payable 13,696

Cr Discount on bonds payable 12,416

Cr Cash 129,280

Step-by-step explanation:

Preparation of the appropriate journal entry for the redemption of the bonds.

Based on the information given the the appropriate journal entry for the redemption of the bonds will be :

Apr 30

Dr Bonds payable 128,000

Dr Loss on redemption of bonds payable 13,696

[128,000-(129,280+12,416)]

Cr Discount on bonds payable 12,416

(128,000-$115,584)

Cr Cash 129,280

(128,000*1.01)

(Being to record the redemption of the bonds)