Question

On January 1, 2020, Cullumber Corporation redeemed $640,000 of bonds at 99. At the time of redemption, the unamortized premium was $19,200.

Prepare the corporation’s journal entry to record the reacquisition of the bonds. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.)

Account Titles and Explanation	Debit	Credit
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount
enter an account title	enter a debit amount	enter a credit amount

Answer 1

Account Titles And Explanation	Debit	Credit
Bonds Payable (given )	$ 640,000
Premium on bonds payable	$ 19,200
Cash (Note 1 )		$ 633,600
Gain on redemption of bonds(Note 2)		$25,600
(To record reacquisition of bonds )
Explanation :
Note 1 :
Cash paid for bonds redemption = Value of bond * 99 %
Cash paid for bonds redemption = $640,000 * 99 %
Cash paid for bonds redemption = $633,600
Note 2 :
Calculate the Gain or loss on redemption of bonds :
Particulars	Amount($)
Decrease in bonds payable	$ 640,000
Add:Decrease in premium on bonds payable	$ 19,200
Less: Cash paid for bonds redemption(see note 1 )	($633,600)
Gain on Redemption of bonds	$ 25,600