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5 June, 13:25

Douglas County Fairgrounds retires a $50 million bond issue when the carrying value of the bonds is $52 million, but the market value of the bonds is only $47 million. The entry to record the retirement will include:

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  1. 5 June, 13:44
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    A credit of 5 million to gain account

    Explanation:

    In this question, we are asked to state the entry to record retirement.

    we employ a mathematical approach to this.

    Mathematically;

    Gain (Loss) on bond redemption

    = Carrying value of bonds - Cash paid

    From the question, we can identify a carrying value of 52 million and a market value of 47 million which is the cash paid

    = 52 million - 47 million

    = 5 million
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