Bonds Payable Problems: A $500,000 Bond is redeemed at 97 when the carrying amount of the bond was $195,000. a. When the bond was issued, was it issued at a premium or a discount? (circle one) The Bond was issued at a discount because the carrying value of the bond is lesser than the face value of the bond. When the carrying amount is lesser than the face value of the bond, It means that the bond is issued at a discount. b. How do you know this? We know this because, the carrying value of the bond is lesser than the face value of the bond of the bond was issued at a premium, the carrying value will be greater than the face value of the bond. Since carrying value is lesser, the bond has been issued at a discount. If so, how much was the balance of the premium or discount at the time of redemption? Balance of the premium or discount at the time of redemption: $500,000 Face value - $495,000 Carrying value=$5,000 Discount Balance d. When the bond is redeemed, how much cash did they have to pay the bondholders? (show your calculation) $500,000*0.97-S485,000 Cash paid to Bondholders is: $485,000 e. What is the gain or loss on the redemption of the bonds? f. What is the general journal entry for the bond redemption? Date Account/description | Debt Credit A $500,000 bond was redeemed at 99 when the carrying amount of the bond was $492,000. a. When the bond was issued, was it issued at a premium or a discount? (circle one) b. How do you know this? C If so, how much was the balance of the premium or discount at the time of redemption? d. When the bond is redeemed, how much cash did they have to pay the bondholders? (show your calculation) e. What is the gain or loss on the redemption of the bonds? 1. What is the general journal entry for the bond redemption? EHT 3 a