Question

Action Company sells bond investments classified as trading securities for $99,000. The face amount is $100,000; unamortized discount is $2,000. What must be included in the journal entry to record the sale?

Answer 1

Cash $99,000

Unamortized discount $2,000

To Gain on redemption of bond $1,000

To bond payable $100,000

Step-by-step explanation:

As the company has sold the bond it has transferred the unamortized loss to profit and loss.