Question
Bonds Payable has a balance of $600,000 and Discount on Bonds Payable has a balance of $50,000. If the issuing corporation redeems the bonds at
Bonds Payable has a balance of $600,000 and Discount on Bonds Payable has a balance of $50,000. If the issuing corporation redeems the bonds at 105, what journal entry will they make when they redeem the bonds?
a. Debit Bonds Payable $600,000 and Loss on Redemption of Bonds $80,000; Credit Discount on Bonds Payable $50,000 and Cash $630,000.
b. Debit Discount on Bonds Payable $50,000 and Cash $630,000; Credit Bonds Payable $600,000 and Loss on Redemption of Bonds $80,000.
c. Debit Bonds Payable $600,000 and Gain on Redemption of Bonds $80,000; Credit Discount on Bonds Payable $50,000 and Cash $630,000.
d. Debit Discount on Bonds Payable $50,000 and Cash $630,000; Credit Bonds Payable $600,000 and Gain on Redemption of Bonds $80,000.
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