Learning Objective 10-P4: Record the retirement of bonds. Skip to question Bonds are retired at maturity with a debit to Bonds Payable and a credit to Cash at par value. The issuer can retire the bonds early by exercising a call option or purchasing them in the market. Bondholders can also retire bonds early by exercising a conversion feature on convertible bonds. The issuer recognizes a gain or loss for the difference between the amount paid and the bond carrying value. Bond Retirement before Maturity Knowledge Check 01 Ajax, Incorporated, issued callable bonds with a par value of $1,000,000 that require the payment of a call premium of $10,000. The bonds have a carrying value