A company previously issued $2,000,000, 10% bonds, receiving a $120,000 premium. On the current year's interest date, after the bond interest was paid and after 40% of the total premium had been amortized, the company purchased the entire bond issue on the open market at 98 and retired it. Prepare the journal entry to record the retirement of these bonds on January 1 of the current year.
What will be an ideal response?
| Jan 1 | Bonds Payable | 2,000,000 |
| Premium on Bonds Payable*………… | 72,000 |
| ? | Cash**……………………………… | 1,960,000 |
| ? | Gain on Retirement of Bonds……. | 112,000 |
| Par value of bonds | $2,000,000 | ? |
| Unamortized premium | 72,000 | * |
| Carrying value of bonds | $2,072,000 | ? |
| Cash paid | 1,960,000 | ** |
| Gain on retirement | $ 112,000 | ? |
| ? | ? | ? |
Business
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