On January 1, 2020, Pina Corporation redeemed $530,000 of bonds
at 96. At the time of redemption, the unamortized premium was
$15,900.
Prepare the corporation’s journal entry to record the reacquisition
of the bonds.
Account Titles and Explanation
Debit
Credit
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount
enter an account title
enter a debit amount
enter a credit amount
Par value of bonds = $530,000
Redemption price = 96
Unamortized bond premium = $15,900
Carrying value of bonds = Par value of bonds+ Unamortized bond premium
= 530,000+15,900
= $545,900
Cash paid to redeem bonds = Par value of bonds x Redemption price
= 530,000 x 96%
= $508,800
Gain on bond redemption = Carrying value of bonds - Cash paid to redeem bonds
= 545,900-508,800
= $37,100
| Date | General Journal | Debit | Credit |
| January 1, 2020 | Bonds payable | $530,000 | |
| Premium on bonds payable | $15,900 | ||
| Gain on bond redemption | $37,100 | ||
| Cash | $508,800 | ||
| (To record the reacquisition of the bonds) |
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