Bonds
Bonds
Bonds
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Accounting for Bond Retirements<br />
• Redeeming bonds at maturity<br />
<strong>Bonds</strong> Payable 900.000<br />
Cash 900.000<br />
... at maturity, the book value (carrying value) of the bond is equal<br />
to its face value.<br />
• Redeeming bonds before maturity<br />
<strong>Bonds</strong> payable 900.000<br />
Discount on <strong>Bonds</strong> payable 31.239<br />
Loss on bond redemption 103.239<br />
Cash 972.000<br />
• ... here is the journal entry for retiring the 8% bond sold to<br />
yield 10% at the end of the 3rd period given the market interest<br />
rate now has declined to 8%.<br />
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