What journal entries would Wonka Inc. make to repurchase the 1,000,000 outstanding bonds with a 5% stated interest rate at 80% of the face value and replace them with a new issue of 1,000,000 of bonds at par with a 15% stated interest rate?
a. Debit Bonds Payable 800,000, Credit Cash 800,000.
b. Debit Bonds Payable 1,000,000, Credit Cash 800,000, Credit Premium on Bonds Payable 200,000.
c. Debit Bonds Payable 800,000, Debit Loss on Bond Redemption 200,000, Credit Cash 1,000,000.
d. Debit Bonds Payable 1,000,000, Credit Cash 1,000,000.