Exercise 10-11 (Algo) Straight-Line: Bond computations, amortization, and bond retirement LO P2, P4

On January 1, 2020, Shay Company issues $300,000 of 10%, 15-year bonds. The bonds sell for $293,250. Six years later, on January 1, 2026, Shay retires these bonds by buying them on the open market for $315,750. All interest is accounted for and paid through December 31, 2025, the day before the purchase. The straight-line method is used to amortize any bond discount.

4. Prepare the journal entry to record the bond retirement.

Journal entry worksheet

• Prepare the journal entry to record the bond retirement.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
January 01	Bonds payable	300,000
	Loss on Retirement of Bonds
	Discount on bonds payable		4,050
	Cash