On 1/1/X1, Kojak Corp. pays $45,000 to retire its bonds early. At the time of the retirement, the bonds have a face value of $40,000 and a carrying value of $42,000. Question: What should be the amount of gain or loss, if any, the company will record as a result of the early retirement? Answe $0 $3,000 loss $3,000 gain $2,000 loss $2,000 gain $5,000 loss $5,000 gain Next page

On 1/1/X1, Kojak Corp. pays $45,000 to retire its bonds early. At the time of the retirement, the bonds have a face value of $40,000 and a carrying value of $42,000. Question: What should be the amount of gain or loss, if any, the company will record as a result of the early retirement? Answe $0 $3,000 loss $3,000 gain $2,000 loss $2,000 gain $5,000 loss $5,000 gain Next page

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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Similar questions

A company has bonds outstanding with a par value of $100,000. The unamortized discount on these bonds is $4,800. The company calls these bonds a a price of $98,000 the gain or loss on retirement is: Multiple Choice $0 gain or loss. $2,800 gain. $2,800 loss.
8 Company A invests in a $55 million bond. It was purchased at par and is accounted for using amortized cost. At year-end Company A believes that there is a 5% the company will not collect 50% of the face value over its life. Company A uses the expected loss impairment model. Discuss any financial reporting issues (should we recognize them or not recognize them) and provide any recommendations on how to handle this situation.
QUESTION 2 Presented below are two independent situations: i) Horton Company redeemed $400,000 face value, 12% bonds at 96 on July 31, 2021. The carrying value of the bonds on the retirement date was $428,500. The bonds pay annual interest and the interest payment due on July 31, 2021, has been made and recorded. ii) Ball Corporation retired $380,000 face value, 10% bonds on September 30, 2021, at 101. The carrying value of the bonds on the retirement date was $371,500. The bonds pay annual interest and the interest payment due on September 30, 2021 has been made and recorded.
A company has bonds outstanding with a par value of $130,000. The unamortized premium on these bonds is $3,185. If the company retired these bonds at a call price of $128,700, the gain or loss on this retirement is: Multiple Choice O O $1,300 gain. $3,185 loss. $4,485 gain.
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John Deere retires a $40 million bond issue when the carrying value of the bonds is $42 million, but the market value of the bonds is $36 million. The entry to record the retirement will include: A. A credit of $6 million to a gain account B. A debit of $6 million to a loss account C. A credit to cash for $42 million D. No gain or loss on retirement
A company has callable bonds outstanding with a par value of $100,000 The unamorticed discount on these bonds is $1,500. The company called to retire these bonde and paid a cal premsum (bonus) of $3,000 What is the gain or loss on this retirement? OA $3.000 koss OB 50 gain or loss OC. $4,500 loss OD. $1,500 gain
(b) Gassy Stores sells $400,000 of 12% bonds on June 1, 2022. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2026. The market rate of similar investments is 10%. On December 1, 2024, Gassy Stores retired the bond for $400,000. The company closes its books on December 31. Requirements: (Show all workings) I. Calculate the proceeds from the sale of the bond. Clearly show the amount of the premium or discount and state two reasons which support the premium or discount calculated. II. Prepare a bond amortization schedule for the bond’s life III. Prepare all the journal entries for 2022, 2023 & 2024
Blossom Company has $2080000 of bonds outstanding. The unamortized premium is $30000. If the company redeemed the bonds at 101, what would be the gain or loss on the redemption? $9200 gain $20800 loss $20800 gain $9200 loss
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Fnanciol ACCOunting Chapter 11 Page 32 12. On Juy 1,2020, Ward Company purchased 5,000 of the P1000 face value,o bonds of Jury Company for P4,614,000 to yiekd 10% per annum. The bonds,WN mature on JUly 1,2025, poy interest semiannually on Janvary 1 and JDIY 1. Wara Uses the interest method of amortization and the bonds are appropriarey Tecorded as an investment at amortized cost. The bonds should be reponed i Ward's December31,2020 statermentof financialpositionnat Q. 4,583,300 b,4న44,700 C. 4,675400 d. 4,969,300 106 0000 foce voue of Show
On January 1, 2021, Jackie Company issued 10,000 P5,000 10% four-year bonds at an effective interest rate of 12%. The interest is payable every July 1 and December 31. On June 30, 2023, 6,000 of the bonds were retired at 98. ( Use 4 decimal for PV) 1 How much is the net effect of the bonds on the 2023 Statement of Comprehensive Income? [Indicate whether it is a gain or loss] 2 How much is the interest expense for 2024?