Alright now let's try this example. On january 1st 2012 Rx Enterprises issued 100,000 of 7% bonds maturing in 10 years while other bonds were paying 8%. The bonds were issued at 94 paid semiannual interest on january 1st and july 1st during 2012 the market race increased to 10% on january 1st 2013 Rx decided to repurchase the bonds when the market price was 88,000. Okay. So they told us the repurchase price again, which they're generally gonna have to tell you what that is, 88,000. So now we need to find the carrying value of the bonds and guess what? It's gonna be the same thing as above. Nothing's changed here. But let's go ahead and do that calculation again. So we bought them, we issued them at 94. So 100,000 times 94%. Well that tells us 94,000 was the original amount we brought in. So we had a discount Of 100,000 -94000 equals 6000. Right? And that's 6000 discount. We're gonna advertise Over the 20 interest payment periods 10 years, two payments per year, 6000 divided by 20 is 300 per period. And it's been two periods, right? Cause it's been one full year. So we've advertised 600 has been advertised. So just like we saw above, we're gonna have that same uh situation where we've advertised from the 6000 original balance in the discount account, we would have advertised 300 another 300 been left with 5400. Right? So 5400 is the left in the in the discount account. So we would do the carrying value would be 100,000 minus 5400 equals the 94,600. Right? So now notice what happened, we've got a carrying value. We have this liability that we owe 94,600 but we're able to repurchase it, we're able to get it off of our books for only 88,000. Right? In this case we have a gain right? We're gonna have a gain because um we bought it back for less than it was on our books and it's a liability. So we have the 94,600 minus 88,000. That tells us that our gain In this case, I don't want to mess up the math. It's been a long day. 6600. Okay 6600 is gonna be our game. Let's go ahead and make our journal entry. Okay, just like before we know we're going to debit bonds payable Right, we have to debit bonds payable to get it off of our books for 100,000 And we know we got to get the discount off of our books. The discount on bonds payable has to get off of our books and that was in the amount of 50 400 right? The amount that was left 5400 over here. That had to go to leave us with a zero balance. So that was the credit to discount on bonds payable to get it off of our books right? We had to credit the 5400 to get it off of our books and leave us with a zero balance. Well what else happened? We know we paid cash right? We had cash and we paid 88,000 in cash but we don't balance right. And guess what's gonna balance us is that gain on retirement of bonds? Just put gain on retirement And that is a credit right gains are credits 6600 we balanced there. Right? So in this case notice our carrying value of the bonds, the 100,000 minus the discount is more then the repurchase price. So we have a gain and the gain is a plug. It's what makes this balance. We needed credits of 6600 to make this balance and we plugged that in there. Cool. So that's about it for the redeeming of bonds before maturity. Let's go ahead and move on to the next