1.1.method of amortization, the entry to retire the bonds on the maturity date would include a:
A)debit to Premium on Bonds Payable for $20,000.
B)debit to Bonds Payable for $780,000.
C)credit to Discount on Bonds Payable for $20,000.
D)credit to Cash for $800,000.

Question

Quizplus · Accepted Answer

When bonds are retired on the maturity date, the company needs to pay the full face value of the bonds. Therefore, the entry to retire the bonds on the maturity date would include a debit to Bonds Payable for $780,000 (face value) and a credit to Cash for $800,000 (face value plus any premium). There is no need to adjust the premium or discount accounts as they have already been amortized over the life of the bonds. Therefore, options A and C are incorrect.

11method of Amortization, the Entry to Retire the Bonds on the Maturity