Business, 22.04.2020 19:51 shakira11harvey6

Eaton Company issued $600,000 of eight percent, 20‑year bonds at 106 on January 1, 2013. Interest is payable semiannually on July 1 and January 1. Through January 1, 2019, Eaton amortized $5,000 of the bond premium. On January 1, 2019, Eaton retired the bonds at 103 (after making the interest payment on that date). Prepare the journal entry to record the bond retirement on January 1, 2019.

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Answer from: malayalatham3357

The Eaton Company's Journal Entries to record the bond retirement are as follows:

Journal Entries:

January 1, 2019

Debit Bonds Payable $600,000

Debit Bonds Premium $31,000

Credit Cash $618,000

Credit Realized Gain on Bond Retirement $13,000

To record the retirement of the bonds payable.

Data and Calculations:

Bonds Payable = $600,000

Amount realized = $636,000 ($600,000 x 106/100)

Bonds Premium = $36,000 ($636,000 - $600,000)

Bond amortization balance = $5,000

Unamortized portion of bond premium = $31,000 ($36,000 - $5,000)

Analysis:

Bonds Payable $600,000 Bonds Premium $31,000 Cash $618,000 Realized Gain on Bond Retirement $13,000

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Answer from: sofipalis9869

Bonds payable$600,000

Premium on bonds payable$31,000

Gain on bonds retirement$13,000

To Cash $618,000

(Being the redemption of bonds is recorded)

Explanation:

The journal entry is shown below:

On Jan 1, 2019

Bonds payable$600,000

Premium on bonds payable$31,000

Gain on bonds retirement$13,000

To Cash $618,000

(Being the redemption of bonds is recorded)

The computation is shown below:

Issue price of bonds (600000 ÷ 100 × 106) $636,000

Less: Face value$600,000

Premium on bonds$36,000

Less: Premium amortized till 2019$5,000

Amortized premium$31,000

Now

Redemption price ($600,000 ÷ 100 × 103)$618,000

For recording this we debited the bond payable , premium and gains on bonds retirement and credited the cash as it reduced the liabilities plus the issued amount exceeded than the face value after considering the amortized same so the same is transferred to premium and the remaining amount is debited to gains on bond retirement.

Answer from: Quest

answer; ///deficit;

Answer from: Quest

Answerwinchell would use the residual method($120-$100)=$20;

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Eaton Company issued $600,000 of eight percent, 20‑year bonds at 106 on January 1, 2013. Interest is...

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