On January 1, 2016, Bonita Industries issued $4,000,000 of its 10% stated rate bonds for $4,475,661 (the market rate was 8% at time of issuance). These bonds were to mature on January 1, 2026 but were callable at 104 any time after December 31, 2016. Interest was payable semiannually on July 1 and January 1. On July 1, 2017, Bonita called all of the bonds and retired them. Bond premium was amortized using the effective interest rate method. Before income taxes, Bonita's gain or loss in 2017 on this early extinguishment of debt was O $315,661 loss O $315,661 gain O $265,798 gain O $265,798 loss

On January 1, 2016, Bonita Industries issued $4,000,000 of its 10% stated rate bonds for $4,475,661 (the market rate was 8% at time of issuance). These bonds were to mature on January 1, 2026 but were callable at 104 any time after December 31, 2016. Interest was payable semiannually on July 1 and January 1. On July 1, 2017, Bonita called all of the bonds and retired them. Bond premium was amortized using the effective interest rate method. Before income taxes, Bonita's gain or loss in 2017 on this early extinguishment of debt was O $315,661 loss O $315,661 gain O $265,798 gain O $265,798 loss

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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