Question

On January 1, 2013, Jacob issued $600,000 of 11%, 15-year bonds at a price of 102. The straight-line method is used to amortize any bond discount or premium and interest is paid semiannually. All interest has been accounted for (and paid) through December 31, 2018. The company retires 30% of these bonds by buying them on the open market at 98 .
What is the journal entry to record the retirement of 30% of the bonds on January 1, 2019?

A.


Bonds Payable 180,000
Cash 177,300
Discount on Bonds Payable 2,700

B.


Bonds Payable 180,000
Loss on Retirement 11,815
Discount on Bonds Payable 2,700
Cash 177,300

C.


Bonds Payable 180,000
Discount on Bonds Payable 2,700
Gain on Retirement 177,300
Cash 5,400

D.


Bonds Payable 180,000
Premium on Bonds Payable 2,700
Gain on Retirement 5,400
Cash 177,300

E.


Bonds Payable 180,000
Cash 180,000

Answer

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