Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2021. LPC's accountant has projected the following amortization schedule from issuance until maturity: Date Cash interest Effective interest Decrease in balance Outstanding balance 01-01-21 207,020 6/30/2021 7,000 6,211 789 206,230 12/31/2021 7,000 6,187 813 205,417 6/30/2022 7,000 6,163 837 204,580 12/31/2022 7,000 6,137 863 203,717 6/30/2023 7,000 6,112 888 202,829 12/31/2023 7,000 6,085 915 201,913 6/30/2024 7,000 6,057 943 200,971 12/31/2024 7,000 6,029 971 200,000 LPC calls the bonds at 103 immediately after the interest payment on 12/31/2022 and retires them. What gain or loss, if any, would LPC record on this date? Multiple Choice No gain or loss $3,717 gain $2,283 loss $6,000 loss
Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2021. LPC's accountant has projected the following amortization schedule from issuance until maturity: Date Cash interest Effective interest Decrease in balance Outstanding balance 01-01-21 207,020 6/30/2021 7,000 6,211 789 206,230 12/31/2021 7,000 6,187 813 205,417 6/30/2022 7,000 6,163 837 204,580 12/31/2022 7,000 6,137 863 203,717 6/30/2023 7,000 6,112 888 202,829 12/31/2023 7,000 6,085 915 201,913 6/30/2024 7,000 6,057 943 200,971 12/31/2024 7,000 6,029 971 200,000 LPC calls the bonds at 103 immediately after the interest payment on 12/31/2022 and retires them. What gain or loss, if any, would LPC record on this date? Multiple Choice No gain or loss $3,717 gain $2,283 loss $6,000 loss
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 9RE
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Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2021. LPC's accountant has projected the following amortization schedule from issuance until maturity:
Date | Cash interest | Effective interest | Decrease in balance | Outstanding balance |
01-01-21 | 207,020 | |||
6/30/2021 | 7,000 | 6,211 | 789 | 206,230 |
12/31/2021 | 7,000 | 6,187 | 813 | 205,417 |
6/30/2022 | 7,000 | 6,163 | 837 | 204,580 |
12/31/2022 | 7,000 | 6,137 | 863 | 203,717 |
6/30/2023 | 7,000 | 6,112 | 888 | 202,829 |
12/31/2023 | 7,000 | 6,085 | 915 | 201,913 |
6/30/2024 | 7,000 | 6,057 | 943 | 200,971 |
12/31/2024 | 7,000 | 6,029 | 971 | 200,000 |
LPC calls the bonds at 103 immediately after the interest payment on 12/31/2022 and retires them. What gain or loss, if any, would LPC record on this date? Multiple Choice
No gain or loss
$3,717 gain
$2,283 loss
$6,000 loss
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