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26 May, 13:06

On January 1, 2017, Flounder Corporation redeemed $510,000 of bonds at 98. At the time of redemption, the unamortized premium was $15,300.

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  1. 26 May, 14:25
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    bonds payable 510,000 debit

    premium on BP 15,300 debit

    cash 499,800 credit

    gain on redemption 23,500 credit

    --to record redemption of bonds--

    Explanation:

    cash outlay:

    face value x quote:

    510,000 x 98/100 = 499,800

    book value:

    face value + premium

    510,000 + 15,300 = 523,300

    Gain on redemption: 523,300 - 499,800 = 23,500

    To journalize we write-off the bonds payable account, we credit the cash outlay and recognize the gain
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