Destin Co. issued $250,000, 9%, 10 year bonds on January 1, 2015. On December 31, 2016...
Destin Co. issued $250,000, 9%, 10 year bonds on January 1, 2015. On December 31, 2016 (after the periodic interest payment was made), the unamortized discount is $642. On January 1, 2017, Destin retires one-half of these bonds on the open market at 101 ½. The journal entry to record the sale of this retirement of debt would include:
A. a debit to Discount on Bonds Payable of $321
B. a debit to Loss on Retirement of Bond of $2,196
C. a credit to Discount on Bonds Payable of $624
D. a debit to Loss on Retirement of Bond of $624
E. a credit to Gain on Retirement of Bond of $2,196
Homework Answers
Cash paid for bonds retired = 1250 x 101.50 = $126875
Unamortized discount for Retired bonds = $321
Loss on Retirement of Bonds = $126875 + 321 - $125000 = $2196
Answer is B. a debit to Loss on Retirement of Bond of $2,196
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