Wittebury Corporation retires its £3,000,000 face value bonds at 105 on January 1, following the payment of annual interest. The carrying value of the bonds at the redemption date is $3,112,350. The entry to record the redemption will include
A) a credit of £37,650 to Gain on Bond Redemption.
B) a debit of £37,650 to Loss on Bond Redemption.
C) a credit of £15,000 to Bonds Payable.
D) a credit of £37,650 to Bonds Payable.

Question

Quizplus · Accepted Answer

The loss on bond redemption is calculated as the difference between the redemption price (£3,150,000) and the carrying value (£3,112,350), resulting in a £37,650 loss.

Wittebury Corporation Retires Its £3,000,000 Face Value Bonds at 105