On September 10, 2009, Mooney Plastic Products issued bonds with a face value of $500,000 for a

Question:

On September 10, 2009, Mooney Plastic Products issued bonds with a face value of $500,000 for a price of 96. During 2012, Mooney exercised a call provision and redeemed the bonds for 101. At the time of the redemption, the bonds had a balance sheet value of $ 490,000.

(a) Prepare the journal entry to record the redemption.

(b) Assume that the bonds were issued in 2009 for 102, and at the time of redemption they had a balance sheet value of $507,000. Prepare the journal entry to record the bond redemption.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...