The balance sheet of Indian River Electronics Corporation as of December 31, 2020, included 11.75% bonds having a face amount of $91.5 million. The bonds had been issued in 2013 and had a remaining discount of $4.5 million at December 31, 2020. On January 1, 2021, Indian River Electronics called the bonds before their scheduled maturity at the call price of 102. Required: Prepare the journal entry by Indian River Electronics to record the redemption of the bonds at January 1, 2021. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.)

January 1, 2021

Bonds Payable                                           $91.5 million Dr

Loss on Redemption-Bonds Payable      $6.33 million Dr

         Discount on Bonds Payable                    $4.5 million Cr

         Cash                                                            $93.33 million Cr

Explanation:

To calculate the loss on redemption of the bonds, we first need to calculate the value at which bonds have been redeemed. The bonds are redeemed at 102 which means they are redeemed at 102% of the face value.

Redemption amount = 91.5 million * 102% = 93.33 million

The bonds have a carrying value on redemption date of,

Carrying value = Face Value - Discount

Carrying value = 91.5 - 4.5 = $87 million

The loss on redemption of bonds is = 93.33 - 87 = $6.33 million

the answerr would be 1