Immediately after making a semiannual interest payment, the carrying value of Woods Company's bonds were as follows:

Required
a. Calculate the gain or loss on redemption assuming Woods redeems the bonds at 101.
b. Prepare the journal entry to record the redemption.
c. Can a company redeem the bonds it issues at any time? Explain.
d. Why might a company want to redeem its bonds before maturity?

Transcribed Image Text:

Bonds payable Less: Discount on bonds payable Carrying value $1,500,000 80,000 $1,420,000