Assume the following account balances immediately after an interest payment date: If the bonds are retired immediately at a total cost of $104,000, the journal entry to record this event is:
D)None of these answers are correct.

Question

Assume the following account balances immediately after an interest payment date:  If the bonds are retired immediately at a total cost of $104,000, the journal entry to record this event is:
D)None of these answers are correct.

Quizplus · Accepted Answer

The journal entry to record the retirement of bonds at a total cost of $104,000 would be to debit Bonds Payable for the carrying value of the bonds ($108,000) and credit Cash for the amount paid to retire the bonds ($104,000). The entry to record this event would be:

Debit: Bonds Payable $108,000 
Credit: Cash $104,000 
Credit: Gain on Retirement of Bonds $4,000

Option A is incorrect because it only debits Bonds Payable and does not credit the cash paid to retire the bonds. Option C is incorrect because it does not account for any gain or loss on the retirement of bonds. Option D is incorrect because there is a correct answer choice.

Assume the Following Account Balances Immediately After an Interest Payment