At december 31, 2017 the following balances existed on the books of beerbo inc.: $1,200,000 bonds payable $168,000 discount on bonds payable $30,000 interest payable if the bonds are retired on january 1, 2018, at 102, what journal entry will beerbo inc. record for redemption? (assume any interest payment is recorded in a different journal entry) debit to the account in the amount of ⭡ bonds payable or cash ⭡ ⭡ (in $) ⭡ debit to the account in the amount of ⭡ loss on bond redemption or discount on bonds payable ⭡ ⭡ (in $) ⭡ credit to the account in the amount of ⭡ discount on bonds payable or bonds payable ⭡ ⭡ (in $) ⭡ credit to the account in the amount of ⭡ cash or loss on bond redemption ⭡ ⭡ (in $) ⭡

bonds payable     1,200,000

interest payable        30,000

loss on redemption 162,000

                  cash                            1,224,000

                  discount on bonds        168,000

to record redemption of the bonds at 102

Explanation:

To know the gain or loss on redemption we will compare the cash disbursement wiht the carrying value fo the bonds

the vbonds are rescue at 102 which means 102% of the face value:

1,200,000 x 102/100 = 1,224,000 cash disbursement

carrying value of the bonds:

1,200,000 - 168,000 discount + 30,000 interest payable = 1,062,000

loss on redemption: 1,224,000 - 1,062,000 = 162,000

we will write-off the bonds related account and credit cash by the amount paid.

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