Question

On January 1, 2013, Jacob issues $800,000 of 9%, 13-year bonds at a price of 96. Six years later, on January 1, 2019, Jacob retires 20% of these bonds by buying them on the open market at 105 . All semiannual interest is accounted for and paid through December 31, 2018, the day before the purchase. The straight-line method is used to amortize any bond discount or premium. What is the journal entry to record the retirement of 20% of the bonds on January 1, 2019?

A.


Bonds Payable 160,000
Cash 156,985
Discount on Bonds Payable 3,015

B.


Bonds Payable 160,000
Loss on Retirement 11,815
Discount on Bonds Payable 3,015
Cash 168,800

C.


Bonds Payable 160,000
Discount on Bonds Payable 3,015
Cash 168,800
Gain on Retirement 5,785

D.


Bonds Payable 160,000
Premium on Bonds Payable 2,585
Discount on Bonds Payable 3,015
Cash 154,400

E.


Bonds Payable 168,800
Cash 168,800

Answer

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