Credit to Cash of $318,000.Credit to Gain on Retirement of Bonds of $4,000.Debit to Bonds Payable $318,000.Debit to Premium on Bonds Payable $12,000.Debit to Bonds Payable $310,00. On January 1, MJKB Incorporated exercises a call option that requires MJKB to pay $318,000for its outstanding bonds that have a carrying value of $322,000 and a par value of $310,000.The company exercises the call option after the semiannual interest payment was made theday before (December 31). The entry to retire the bonds does not include which of thefollowing?

Solution:- Preparation of journal entry as follows under:- Note:- Journal at the time of retire of…

Answered: semiannual interest payment was made…

semiannual interest payment was made day before (December 31). The entry to retire the bonds does not include which of the "ollowing?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Credit to Cash of $318,000.
Credit to Gain on Retirement of Bonds of $4,000.
Debit to Bonds Payable $318,000.
Debit to Premium on Bonds Payable $12,000.
Debit to Bonds Payable $310,00.

On January 1, MJKB Incorporated exercises a call option that requires MJKB to pay $318,000
for its outstanding bonds that have a carrying value of $322,000 and a par value of $310,000.
The company exercises the call option after the semiannual interest payment was made the
day before (December 31). The entry to retire the bonds does not include which of the
following?

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