Answer:
The Journal entry is as follows:
Bonds payable A/c Dr. $375,000
To Discount on Bonds payable $40,000
To Gain on redemption of the bonds $15,000
To Cash $320,000
(To record the redemption of the bonds)
Workings:
Gain on redemption of the bonds:
= Bonds payable - Discount on Bonds payable - Cash
= $375,000 - $40,000 - $320,000
= $15,000
