Johan Limited.has a $100,000 bond outstanding with an unamortized discount of $5,679.The company has decided to retire the bonds for a cost of $102,000.The journal entry to record the retirement of the bonds will include which of the following?

Question

Quizplus · Accepted Answer

When the bond is retired, the company will have to pay $102,000 which is greater than the face value of bond ($100,000). In addition, there is an unamortized discount of $5,679. Therefore, the total loss on redemption of bonds will be $102,000 - $100,000 + $5,679 = $7,679. Thus, the correct journal entry will include a Loss on redemption of bonds of $7,679, which is option C.