Bonds Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond. Redemption of Bonds The process of repaying the sale amount of bonds to bondholders, at the time of maturity or before the maturity period is called as redemption of bonds. It is otherwise called as retirement of bonds. To identify: The account to be debited, and the account to be credited when a bond originally issued at premium, is redeemed at 97 before maturity after the payment of interest.

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Chapter 10, Problem 17Q

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

Redemption of Bonds

The process of repaying the sale amount of bonds to bondholders, at the time of maturity or before the maturity period is called as redemption of bonds. It is otherwise called as retirement of bonds.

To identify: The account to be debited, and the account to be credited when a bond originally issued at premium, is redeemed at 97 before maturity after the payment of interest.

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