Question
Asked Aug 28, 2019
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On January 1, 2017, Henderson Corporation redeemed $500,000 of bonds at 99. At the time of redemption, the unamortized premium was $15,000. Prepare the corporation’s journal entry to record the reacquisition of the bonds

 

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Step 1

Calculate the amount of cash paid to redeem the bond.

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Cash paid to redeem the bond = Value of bond x 99% =$500,000 x 99% S495,000

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Step 2

Calculate the gain or loss on bond...

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Decrease in bonds payable Gain or loss on bond redemption +Decrease in premium on bonds payable -Cash paid for bond redemption $500,000 $15,000 $495,000 = $20,000 gain

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