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

See similar textbooks

Similar questions

On February 1, 2022, Mojito, Inc. issued $2,000,000, 5% bonds for $2,165,000. Interest is payable semiannually on January 31 and July 31 with the bonds maturing on February 1, 2032 (10-year bonds). The bonds are callable at 102. On February 1, 2022, Mojito retired $750,000 of the bonds at the call price. Required: Prepare the journal entry for the issuance of the bonds Prepare any required journal entries for interest payments on July 31, 2022 and January 31, 2023. Mojito uses straight-line amortization to amortize any discount or premium. Prepare the required entry to record the retirement of the bonds on February 1, 2023.
On June 30, 2017, ABC Co. Issued $ 6,000,000, 6%, 4-year bonds. The sold to yield an effective interest rate of 8%. Interest is paid semiannually on June 30 and December 31. The company uses the effective interest method of amortization. Required: For ABC Co. answer the following independent requirements STONERE a Assume that the bond was issued on August 31, 2017, prepare the journal entry on December 31, 2017
Leong Corporation was authorized to issue $500,000 face value bonds on January 1, 2017. The corporation issued $100,000 of face value bonds on that date. The bonds will mature on December 31, 2020. Interest is paid semi-annually on June 30 and December 31 each year. The bond interest rate per the terms of the indenture is 12% per year. Required: Answer the questions for each of the following cases. Case A: The bonds were issued at face value. Case B: The bonds were issued for $112,000. Case C: The bonds were issued for $88,000. a. How much cash does Leong receive for the bonds? b. How much annual interest must the corporation pay? On what amount does the corporation pay? c. Prepare the journal entry to record the sale of the bonds. d. Record the entries applicable to interest and straight-line amortization for June 30, 2017 and for December 31, 2017.
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.
On January 1, 2015, ABC Co, issued ten - year bonds with a face value of $ 1,000,000 and a stated interest rate of 10%, payable semiannually on July 1 and January 1. The bonds were sold to yield 12%. The issue price of the bonds was $ 885,500. On September 30, 2016, the company decided to extinguish 65% of the bonds by making a cash payment of $ 600,000. The reacquisition cash payment includes any accrued interest by the date of extinguishment. The company uses the effective interest method of amortization. SHARE Required: For ABC Co: Prepare the necessary journal entry (ies) on September 30, 2016.
On March 1, 2022, Havenford Corporation issued $240,000, 4 year, 6% bond. Interest is to be paid semi-annually September 1 and March 1. The market rate for similar bonds was 5% at the time the bonds were sold. Havenford Corporation has a April 30 year end and uses the effective interest method to amortize any discount or premium.On September 2, 2024, Havenford redeemed 48% of the face value of these bonds at 101 and retired them.1. Calculate the PV of the bonds 2. Complete the amortization table using the effective interest method. 3. Record the following journal entries in the table below. i) Prepare the journal entry to record the issuance of the bond. ii) Prepare the journal entry to accrue the bond interest at corporate year end. iii) Prepare the journal entry to record the first interest payment. iv) Prepare the journal entry for the retirement of the bonds. Please do it properly correctly and with all the steps or calculations Kindly do it right i need a special expert for this…
On January 2, 2015, Blossom Corporation issued $1,600,000 of 10% bonds at 99 due December 31, 2024. Interest on the bonds is payable annually each December 31. The discount on the bonds is also being amortized on a straight-line basis over the 10 years. (Straight-line is not materially different in effect from the preferable "interest method.") The bonds are callable at 102 (i.e., at 102% of face amount), and on January 2, 2020, Blossom called $960,000 face amount of the bonds and redeemed them. Ignoring income taxes, compute the amount of loss, if any, to be recognized by Blossom as a result of retiring the $960,000 of bonds in 2020. (Round answer to 0 decimal places, e.g. 38,548.) Loss on redemption $ Prepare the journal entry to record the redemption. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent…
On January 1, 2021, Essence Communications issued $700,000 of its 10-year, 10% bonds for $619,711. The bonds were priced to yield 12%. Interest is payable semiannually on June 30 and December 31. Essence Communications records interest at the effective rate and elected the option to report these bonds at their fair value. On December 31, 2021, the market interest rate for bonds of similar risk and maturity was 11%. The bonds are not traded on an active exchange. The decrease in the market interest rate was due to a 1% decrease In general (risk-free) interest rates. (EV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Using the information provided, estimate the fair value of the bonds at December 31, 2021. 2. to 4. Prepare the journal entries to record interest on June 30, 2021 (the first interest payment), on December 31, 2021 (the second Interest payment) and to adjust the bonds to their fair value…
On January 1, 2018, Essence Communications issued $800,000 of its 10-year, 8% bonds for $700,302. The bondswere priced to yield 10%. Interest is payable semiannually on June 30 and December 31. Essence Communications records interest at the effective rate and elected the option to report these bonds at their fair value. OnDecember 31, 2018, the market interest rate for bonds of similar risk and maturity was 9%. The bonds are nottraded on an active exchange. The increase in the market interest rate was due to a 1% increase in general (riskfree) interest rates.Required:1. Using the information provided, estimate the fair value of the bonds at December 31, 2018.2. Prepare the journal entry to record interest on June 30, 2018 (the first interest payment).3. Prepare the journal entry to record interest on December 31, 2018 (the second interest payment).4. Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2018,balance sheet
On July 1, 2021, Spear Co. issued 1,000 of its 10%, P1,000 bonds at 99 plus accrued interest. The bonds are dated April 1, 2015 and mature on April 1, 2031. Interest is payable semiannually on April 1 and October 1. What amount did Spear receive from the bond issuance? a.) P1,015,000 b.) P1,000,000 c.) P990,000 d.) P965,000
On January 1, 2015, ABC Co. issued ten-year bonds with a face value of $1,000,000 and a stated interest rate of 10%, payable semiannually on July 1 and January 1. The bonds were sold to yield 12%. The issue price of the bonds was $885,500. On September 30, 2016, the company decided to extinguish 65% of the bonds by making a cash payment of $600,000. The reacquisition cash payment includes any accrued interest by the date of extinguishment. The company uses the effective-interest method of amortization. Required: For ABC Co: Prepare the necessary journal entry(ies) on September 30, 2016. OR SHARE
On December 31, 2016, Interlink Communications issued 6% stated rate bonds with a face amount of $100 million. The bonds mature on December 31, 2046. Interest is payable annually on each December 31, beginning in 2017. Determine the price of the bonds on December 31, 2016, assuming that the market rate of interest for similar bonds was 7%.