Extinguishment of Bonds Prior to MaturityOn December 1, 2017, Cone Company issued its 9%, $510,000 face value bonds for $590,000, plus accrued interest. Interest is payable on November1 and May 1. On December 31, 2019, the book value of the bonds, inclusive of the unamortized premium, was $540,000. On July 1, 2020, Conereacquired the bonds at 97 plus accrued interest. Cone appropriately uses the straight-line method for the amortization because the results do notmaterially differ from those of the effective interest method.Required:Prepare a schedule to compute the gain or loss on this redemption of debt. Enter all values as positive values.Cone CompanyComputation of Gain on Extinguishment of DebtJuly 1, 2020хBook value of bonds on December 1, 2017хBook value of bonds on December 31, 2019Amortization for 25 monthsMonthly amortizationBook value of bonds on December 31, 2019Amortization for January 1 to July 1, 2020Book value of bonds on July 1, 2020Cost of reacquisitionGain on bond redemption

Bond is an instrument which represent the amount of loan raised by the borrower from the lender. It…

Answered: Extinguishment of Bonds Prior to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Seaview Company issued $200,000 of 15-year, 9% callable bonds payable on July 31, 2025, at 97. On July 31, 2028, Seaview Company called the bonds at 101. Assume annual interest payments. Requirements 1. Without making journal entries, compute the carrying amount of the bonds payable at July 31, 2028. 2. Assume all amortization has been recorded properly. Journalize the retirement of the bonds on July 31, 2028. No explanation is required. Requirement 1. Without making journal entries, compute the carrying amount of the bonds payable at July 31, 2028. (Assume bonds payable are amortized using the straight-line amortization method.) First, complete the sentences below. The carrying amount of the bonds payable at issuance (July 31, 2025) is issuance amounts to $ 6,000 $ 194,000. The discount on the bonds at The carrying amount of the bonds payable at July 31, 2028 is $ 195,200 Requirement 2. Assume all amortization has been recorded properly. Journalize the retirement of the bonds on July…
Cullumber Company sold $2,000,000, 4%, 10-year bonds on January 1, 2022. The bonds were dated January 1 and pay interest annually on January 1. Cullumber Company uses the straight-line method to amortize bond premium or discount. The bonds were sold at 101. (c) Prepare the journal entries for interest and the amortization of the premium in 2022 and 2023. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2022 enter an account title for the journal entry on december 31, 2022 enter a debit amount enter a credit amount enter an account title for the journal entry on december 31, 2022 enter a debit amount enter a credit amount enter an account title for the journal entry on december 31, 2022 enter a debit amount enter a credit amount…
Didde Company issues $20,000,000 face value of bonds at 96 on January 1, 2013. The bonds are dated January 1, 2013, pay interest semiannually at 8% on June 30 and December 31, and mature in 10 years. Straight-line amortization is used for discounts and premiums. On September 1, 2016, $12,000,000 of the bonds are called at 102 plus accrued interest. What gain or loss would be recognized on the called bonds on September 1, 2016? please show me the work, the calculation.
Sterium Company issues P1,000,000 face value, 6%, 5-year bonds payable on December 31, 2018. Interest is paid semiannually each June 30 and December 31. The bonds sell at a price of 97; It uses the straight-line method of amortizing bond discount or premium. Sterium 's entry at June 30, 2019, Journalize to record the first semiannual payment of interest and amortization of discount on the bonds.
On December 31, 2020, the liability section of Martin Luther Company's statement of financial position included 10% bonds payable of P10,000,000 and unamortized premium on bonds payable of P180,000. Further verification revealed that these bonds were issued on December 31, 2018 and will become due on December 31, 2028. Interest at 12% is payable every December 31. On April 1, 2021, Martin Luther retired P4,000,000 of these bonds at 97 plus accrued interest. How much was the gain or (loss) on the retirement of bonds on April 1, 2021? Enclosed in parenthesis in case of loss.
June Company issued P4,000,000 of 8.5%, 5-year bonds on April 1, 2023. Interest payment dates are April 1 and October 1. With a 9% market rate of interest, the bonds were sold for P3,926,000. On November 1, 2026, P2,000,000 of the bonds were retired at face value plus accrued interest.How much gain or loss should June Company record upon retirement of these bonds? 8,808 loss 8,808 gain 9,499 loss 5,359 gain
On January 1, 2019, Ellison Co. issued 3-year, 10%, $200,000 face value bonds. The bonds were issued at 95.0827 , the interest payable semiannually on July 1 and January 1. The bonds were sold to yield 12%. On July 1, 2020 The company retire 60% of the bonds at 102. a) Complete the following table: Cash Paid Carrying amount of Interest Discount Date Expense Amortization bonds January 1, 2019 July 1, 2019 January 1, 2020 July 1, 2020 January 1, 2021 July 1, 2021 January 1, 2022 b) Journalize the required entries on the following dates January 1, 2019 July 1, 2019 December 31, 2019 – adjusting entry January 1, 2020 July 1, 2020 The payment of interest July 1, 2020 the retirement of 60% of the bonds at 102 December 31, 2020 – adjusting entry
On January 1, 2018, Rei Company obtained $4,000,000 of 12% face value bonds at $3,767,000 to be held financial assets at amortized cost with a 14% effective yield. Interest on bonds is payable annually on December 31 and bonds mature on January 1, 2022. The effective interest method of amortization is used. The quoted price of the bonds is as follows: December 31, 2018: 97 December 31, 2019: 98 June 30, 2020: 99.a. What amount will be recognized as income on the 2018 income statement?b. What amount will be the gain (loss) on sale assuming all the bonds were sold on June 30, 2020 at 99 plus accrued interest?c. How much is the carrying amount of investment on December 31, 2018?
On July 1, 2019, Pen Co. issued 4,000 of its 8%, P1,000 face value bonds payable for P3,504,000. The bonds were issued to yield 10%. The bonds are dated July 1, 2019 and mature July 1, 2029. Interest is payable semiannually on January 1 and July 1. Using effective interest method, what amount of the bond discount should be amortized for the six months ended December 31, 2019?
On January 1, 2019, P Sport Corporation issued 10% bonds with a face value of $200,000. The bonds are sold for $191,000. The bonds pay interest semiannually on June 30 and December 31 and the maturity date is December 31, five years from now. X Sport records straight-line amortization of the bond discount. The bond interest expense for the year ended December 31, 2019 is:
Foreman Company issued $800,000 of 10%, 20-year bonds on January 1, 2020, at 84.95 to yield 12%. Interest is payable semiannually on July 1 and January 1.Prepare the journal entries to record (a) the issuance of the bonds, (b) the payment of interest and related amortization on July 1, 2020, and (c) the accrual of interest and the related amortization on December 31, 2020.
The Flint Company issued $330.000 of 7% bonds on January 1, 2020. The bonds are due January 1, 2025, with interest payable each July 1 and January 1. The bonds were issued at 96. Prepare the journal entries for (a) January 1, (b) July 1, and (c) December 31. Assume The Flint Company records straight-line amortization semiannually. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. No. (a) (b) (d Date Account Titles and Explanation Debit Credi

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