# A $1,200,000 bond issue on which there is an unamortized premium of$63,956 is redeemed for $1,250,000. Journalize the redemption of the bonds. BuyFindarrow_forward ### Financial Accounting 15th Edition Carl Warren + 2 others Publisher: Cengage Learning ISBN: 9781337272124 #### Solutions Chapter Section BuyFindarrow_forward ### Financial Accounting 15th Edition Carl Warren + 2 others Publisher: Cengage Learning ISBN: 9781337272124 Chapter 14, Problem 7PEB Textbook Problem 13 views ## A$1,200,000 bond issue on which there is an unamortized premium of $63,956 is redeemed for$1,250,000. Journalize the redemption of the bonds.

To determine

Journalize the redemption of the bonds.

### Explanation of Solution

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations. Premium on bonds payable: It occurs when the bonds are issued at a high price than the face value. Journalize the redemption of the bonds.  Date Account Title and Explanation Post Ref Debit ($) Credit ($) Bonds Payable Â 1,200,000 Premium on Bonds Payable 63,956 Â Gain on Redemption of Bonds Payable 13,956 Â Â Â Cash 1,250,000 Â Â Â (To record the redemption of the bonds) Â Table (1) • Bonds payable is a liability and it is decreased. So, debit it by$1,200,000.
• Premium on Bonds Payable is an adjunct liability account and it is decreased. So, debit it by $63,956. • Gain on Redemption of Bonds Payable is an equity account and it is increased. So, credit it by$13,956.
• Cash is an asset and it is decreased. So, credit it by \$1,250,000.

Working notes:

Determine the gain or loss on the redemption of the bonds payable.

Step 1: Calculate carrying amount of bonds payable on the redemption...

### Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

#### The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started