Question

A company retires its bonds at 105. The face value is $100,000 and the carrying value of the bonds at the retirement date is $103,745. The issuer's journal entry to record the retirement will include a: Group of answer choices Credit to Premium on Bonds. Credit to Bonds Payable. Debit to Premium on Bonds. Credit to Gain on Bond Retirement. Debit to Discount on Bonds.

Answer 1

Answer: Debit to Premium on Bonds.

Explanation:

Face value of bond = $100000

Carrying value of bond = $103745

The issuer's journal entry to record the retirement will include a Debit to Premium on Bonds which will be in the value of ($103745 - $100000) = $3745.