P10-13 (Algo) Recording the Early Retirement of a Bond Issued at a Premium (with Premium Account) LO10-7

Several years ago, Cyclop Company issued bonds with a face value of $1,000,000 for $1,055,000. As a result of declining interest rates, the company has decided to call the bonds at a call premium of 5 percent over par. The bonds have a current book value of $1,020,000. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Required:

Record the retirement of the bonds, using a premium account.