Kendall issuus $175,000 three year bonds dated January 1 2009, that pay semi-annual interest on June 30 and December 31st. They are issued at $179,439 and their market rate is 10% at the issue date. Prepare the journal entry to record the bonds' retirement on January 1, 2011 at 105. (I have the solution already, but do not understand how to break up $8350 between the Premium and Loss)

My solution to my question is the premium on bonds payable is 1624 calculated by the unamortized balance after four payments. ( forgot to put four payment into amortization, instead putting in two) The bond loss by retirement well, I did get an 87% on the online exam last night but I am still working on this. The answer is 7126 for bond loss. Cash is credited for 183,750.

If a premium or discount is used, than we calculate the premium/disc. Amount first and add the difference to the loss/gain last.

Unless it is callable, in which case, you take the carrying value and subtract the par value of the bond to get your premium. You can than record the difference into a bond retirement or loss.