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:
A)Debit to Premium on Bonds.
B)Credit to Premium on Bonds.
C)Debit to Discount on Bonds.
D)Credit to Gain on Bond Retirement.
E)Credit to Bonds Payable.

Question

Quizplus · Accepted Answer

The company retires the bonds at a premium (105% of face value), so the premium on bonds must be debited to remove it from the books.

A Company Retires Its Bonds at 105