Retirement of Bonds at a price other than carrying value of bonds : Sometimes, the bonds are retired at a price other than carrying amount of bonds. In such situation the difference between the carrying value and amount of repayment shall be treated as Gain or loss on retirement of bonds. When the carrying amount of bonds is more than amount repaid, then it will be gain on retirement of bonds and when the carrying amount is lesser than the amount repaid then it will termed as loss on retirement of bonds. Accounting treatment of retirement of bonds payableis debiting the nominal value of bonds payable and crediting the cash for the amount repaid. When the carrying value of bonds payable is lower or higher than nominal value, the difference is unamortized discount or unamortized premium to be credited or debited along in the same entry. And the gain or loss on retirement as computed above shall be credited or debited in the same entry for completing the entry for retirement of bonds. The Journal entry for retirement of bonds with carrying value of $ 9000.

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Chapter 14, Problem 10E

To determine

Retirement of Bonds at a price other than carrying value of bonds:

Sometimes, the bonds are retired at a price other than carrying amount of bonds. In such situation the difference between the carrying value and amount of repayment shall be treated as Gain or loss on retirement of bonds. When the carrying amount of bonds is more than amount repaid, then it will be gain on retirement of bonds and when the carrying amount is lesser than the amount repaid then it will termed as loss on retirement of bonds.

Accounting treatment of retirement of bonds payableis debiting the nominal value of bonds payable and crediting the cash for the amount repaid. When the carrying value of bonds payable is lower or higher than nominal value, the difference is unamortized discount or unamortized premium to be credited or debited along in the same entry. And the gain or loss on retirement as computed above shall be credited or debited in the same entry for completing the entry for retirement of bonds.

The Journal entry for retirement of bonds with carrying value of $ 9000.

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