Question

The current carrying value of Marigold’s $811000 face value bonds is $806000. If the bonds are retired at 105, what would be the amount Marigold would pay its bondholders?

Answer 1

Answer:

$846,300

Explanation:

since the face value of the bonds is $806,000 and they are retired at 105, the company will pay $806,000 x 1.05 = $846,300

the journal entry to record this transaction would be:

Dr Bonds payable 806,000

Dr Premium on bonds payable 5,000

Dr Loss on redemption of bonds 35,300

    Cr Cash 846,300