On January 1, 2020, Bramble Corporation issued $5,130,000 of 10% bonds at 102 due December 31, 2029. Bramble paid $81,000 in bond issue costs when the bonds were issue to the market. These will be amortized over the life of the bond. The premium 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 104 (i.e., at 104% of face amount), and on January 2, 2025, Bramble called one-half of the bonds and retired them. Ignoring income taxes, compute the amount of loss, if any, to be recognized by Bramble as a result of retiring the $2,565,000 of bonds in 2025. Loss on redemption Date Prepare the journal entry to record the retirement. (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 the amount is entered. Do not indent manually. List all debit entries before credit entries.) January 2, 2025 $ $2,285,700 Account Titles and Explanation Bonds Payable Premium on Bonds Payable Unamortized Bond Issue Costs cash Loss on Redemption of Bonds Debit $2,565,000 $81,000 $2,668,800 Credit $256,500 $846,300
On January 1, 2020, Bramble Corporation issued $5,130,000 of 10% bonds at 102 due December 31, 2029. Bramble paid $81,000 in bond issue costs when the bonds were issue to the market. These will be amortized over the life of the bond. The premium 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 104 (i.e., at 104% of face amount), and on January 2, 2025, Bramble called one-half of the bonds and retired them. Ignoring income taxes, compute the amount of loss, if any, to be recognized by Bramble as a result of retiring the $2,565,000 of bonds in 2025. Loss on redemption Date Prepare the journal entry to record the retirement. (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 the amount is entered. Do not indent manually. List all debit entries before credit entries.) January 2, 2025 $ $2,285,700 Account Titles and Explanation Bonds Payable Premium on Bonds Payable Unamortized Bond Issue Costs cash Loss on Redemption of Bonds Debit $2,565,000 $81,000 $2,668,800 Credit $256,500 $846,300
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2020, Bramble Corporation issued $5,130,000 of 10% bonds at 102 due December 31, 2029. Bramble paid $81,000 in
bond issue costs when the bonds were issue to the market. These will be amortized over the life of the bond. The premium 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 104 (i.e., at 104% of face amount), and on January 2, 2025, Bramble called one-half of the bonds and retired
them.
Ignoring income taxes, compute the amount of loss, if any, to be recognized by Bramble as a result of retiring the $2,565,000 of bonds
in 2025.
Loss on redemption
Prepare the journal entry to record the retirement. (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 the amount is entered. Do not indent manually. List all debit entries before
credit entries.)
Date
January 2,
2025
$2,285,700
Account Titles and Explanation
Bonds Payable
Premium on Bonds Payable
Unamortized Bond Issue Costs
Loss on Redemption of Bonds
cash
Debit
$2,565,000
$81,000
$2,668,800
Credit
$256,500
$846,300
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