Final answer:
Belle Corporation records the redemption of bonds at 105% of their face value of $600,000. The carrying value at redemption is $621,500, leading to an $8,500 loss recorded in the Loss on Bond Redemption account.
Step-by-step explanation:
The question pertains to the accounting treatment for the redemption of bonds before their maturity. Specifically, Belle Corporation is retiring its bonds at 105, which indicates that the bonds are being repurchased at 105% of their face value.
The face value given is $600,000. The entry to record this redemption will include a debit to the Bonds Payable account for the face value of the bonds, a debit to the Loss on Bond Redemption account for the difference between the carrying value and the redemption price, and a credit to the Cash account for the total redemption price paid.
The carrying value of the bonds at the redemption date is $621,500, and the bonds are retired at 105% of the face value, which is $600,000 x 105% = $630,000. Hence, the Loss on Bond Redemption is the difference between the redemption price and the carrying value of the bonds, which is $630,000 - $621,500 = $8,500.