Godwin Corporation retires its bonds at 105 on January 1,after the payment of interest.The face value of the bonds is $560,000.The carrying value of the bonds at retirement is $579,500.The entry to record the retirement will include a:

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The carrying value of the bonds at retirement is $579,500, which is higher than the face value of $560,000. This means that there is a premium on the bonds. The difference between the carrying value and the face value is $19,500, which represents the unamortized premium. When the bonds are retired, the premium on bonds payable account is debited for the unamortized balance, which is $19,500. The entry to record the retirement will therefore include a debit of $19,500 to Premium on Bonds Payable. There is no gain or loss on retirement because the bonds are retired at a price higher than their face value, so the company benefits from the transaction.

Godwin Corporation Retires Its Bonds at 105 on January 1,after