Acme Manufacturing retired an issue of bonds before they matured.The bonds had been issued at their face value of $500,000,and the cash paid for the retirement amounted to $503,250.What journal entry was made to record the bond retirement?
A)Debit Bonds Payable for $500,000,debit Loss on Bond Retirement for $3,250,and credit Cash for $503,250
B)Debit Bonds Payable for $503,250,credit Gain on Bond Retirement for $3,250,and credit Cash for $500,000
C)Debit Bonds Payable and credit Cash for $503,250
D)Debit Bonds Payable for $500,000,debit Gain on Bond Retirement for $3,250,and credit Cash for $503,250

Question

Quizplus · Accepted Answer

Debit Bonds Payable for $500,000 (the face value),debit Loss on Bond Retirement for $3,250 (or cash paid to retire bonds of $503,250 − carrying value of $500,000),and credit Cash for $503,250 (the amount paid).

Acme Manufacturing Retired an Issue of Bonds Before They Matured