Final answer:
The retirement of a bond at maturity involves debiting the Bonds Payable account and crediting the Cash account for the face value of the bond, assuming no additional factors like bond premiums or discounts.
Step-by-step explanation:
To record the retirement of the bond at maturity, the correct journal entry would reverse the liability established when Vasquez issued the bond.
At maturity, the face value of the bond must be paid back to the bondholders, which means the company would debit the Bonds Payable account to remove the liability from the balance sheet and credit the Cash account to represent the outflow of funds to the bondholders.
The journal entry would be:
- Debit Bonds Payable $400,000
- Credit Cash $400,000
This entry assumes the bond was issued and is being retired at face value and that there are no premiums, discounts, or interest payable at the time of retirement that would require additional entries.