Ayayai Corp. redeemed $158,000 face value, 12% bonds on April 30, 2022, at 102. The carrying value of the bonds at the redemption date was $142,674. The bonds pay annual interest, and the interest payment due on April 30, 2022, has been made and recorded. Required:
Prepare the appropriate journal entry for the redemption of the bonds.

Answer and Explanation:

The journal entries are given below:

On 30-Apr

Bond Payable [$158,000]                  158,000  

Loss on Bond redemption [$161,160 - $142,674]                   18,486  

       Discount on bonds payable                    15,326

       Cash [$158,000 × 102%]                   161,160

[being the redemption of the Bond is recorded]  

Here the bond payable and loss is debited as it decreased the assets and increased the losses and credited the cash & discount on bond payable

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