Question
On January 1 of Year 1, M&M issued a $100,000, 10%, 20-year bond for $119,636. Interest is paid annually each December 31. This bond was
On January 1 of Year 1, M&M issued a $100,000, 10%, 20-year bond for $119,636. Interest is paid annually each December 31. This bond was retired on January 1 of Year 3, just one day after the second coupon payment was made. At that time, the carrying value of the bond was $118,743. The total amount paid to retire this bond was $110,000. The entry to record the retirement of this bond would include a
DEBIT to Loss on Bond Retirement of $8,743
CREDIT to Gain on Bond Retirement of $8,743
DEBIT to Premium on Bonds of $19,636
CREDIT to Premium on Bonds of $19,636
DEBIT to Bonds Payable of $118,743
CREDIT to Bonds Payable of $100,000
DEBIT to Premium on Bonds of $8,743
CREDIT to Premium on Bonds of $8,743
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