What is the accounting entry for the retirement of bonds payable?

When bonds payable are retired, the company must remove the liability from its balance sheet, which is done by debiting the Bonds Payable account. This reflects the reduction of liabilities as the company has settled its obligation to bondholders. In terms of cash outflows, if the retirement involves a payment to bondholders, the company will also need to credit Cash to reflect that it has paid out cash to extinguish the bonds payable.

The accounting entry thus involves debiting Bonds Payable to decrease the liability and crediting Cash to show the outflow of resources. This entry is crucial in conveying the financial impact of the transaction on the company's financial statements, ensuring that both sides of the accounting equation remain balanced.

The other choices do not accurately represent the correct accounting for bond retirement. For example, debiting Cash would incorrectly suggest that the company is receiving money rather than paying it out, and associating any interest accounts would not be appropriate in this context since the transaction concerns the retirement of principal rather than interest payments.