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On January 1, 2020, Sage Corporation issued $5,320,000 of 10% bonds at 102 due December 31, 2029. Sage paid $85,000 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 105 (i.e., at 105% of face amount), and on January 2, 2025, Sage called one-half of the bonds and retired them. Ignoring income taxes, compute the amount of loss, if any, to be recognized by Sage as a result of retiring the $2,660,000 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.)

On January 1, 2020, Sage Corporation issued $5,320,000 of 10% bonds at 102 due December 31, 2029. Sage paid $85,000 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 105 (i.e., at 105% of face amount), and on January 2, 2025, Sage called one-half of the bonds and retired them. Ignoring income taxes, compute the amount of loss, if any, to be recognized by Sage as a result of retiring the $2,660,000 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.)

FINANCIAL ACCOUNTING
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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On January 1, 2020, Sage Corporation issued $5,320,000 of 10% bonds at 102 due December 31, 2029. Sage paid $85,000 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 105 (i.e., at 105% of face amount), and on January 2, 2025, Sage called one-half of the bonds and retired them. Ignoring income taxes, compute the amount of loss, if any, to be recognized by Sage as a result of retiring the $2,660,000 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.)
Transcribed Image Text:On January 1, 2020, Sage Corporation issued $5,320,000 of 10% bonds at 102 due December 31, 2029. Sage paid $85,000 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 105 (i.e., at 105% of face amount), and on January 2, 2025, Sage called one-half of the bonds and retired them. Ignoring income taxes, compute the amount of loss, if any, to be recognized by Sage as a result of retiring the $2,660,000 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.)
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