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Redemption of Bonds Payable An $800,000 bond issue on which there is an unamortized premium of $57,000 is redeemed for $785,000. Journalize the redemption of the bonds. If an amount box does not require an entry, leave it blank.

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Answer:

Dr Bonds payable 800,000

Dr premium on bonds payable 57,000

    Cr Cash 785,000

    Cr Gain on redemption of bonds 72,000

Explanation:

the bonds' carrying value = face value + unamortized premium = $800,000 + $57,000 = $857,000

the gain or loss resulting form the redemption of the bonds = carrying value - redemption cost = $857,000 - $785,000 = $72,000

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