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On January 1, 2020, Skysong Corporation issued $5,410,000 of 10% bonds at 102 due December 31, 2029. Skysong paid $88,000 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 (ie, at 104% of face amount), and on January 2, 2025, Skysong called one-half of the bonds and retired them. Ignoring income taxes, compute the amount of loss, if any, to be recognized by Skysong as a result of retiring the $2,705,000 of bonds in 2025. Loss on redemption $ -21640 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, Skysong Corporation issued $5,410,000 of 10% bonds at 102 due December 31, 2029. Skysong paid $88,000 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 (ie, at 104% of face amount), and on January 2, 2025, Skysong called one-half of the bonds and retired them. Ignoring income taxes, compute the amount of loss, if any, to be recognized by Skysong as a result of retiring the $2,705,000 of bonds in 2025. Loss on redemption $ -21640 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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Current Attempt in Progress Your answer is partially correct. On January 1, 2020, Skysong Corporation issued $5,410,000 of 10% bonds at 102 due December 31, 2029. Skysong paid $88,000 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, Skysong called one-half of the bonds and retired them. Ignoring income taxes, compute the amount of loss, if any, to be recognized by Skysong as a result of retiring the $2,705,000 of bonds in 2025. Loss on redemption Date January 2, 2025 $ 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.) Account Titles and Explanation Bonds Payable Premium on Bonds Payable -21640 Loss on Redemption of Bonds Cash Debit 2705000 32460 21640 Credit DOOD 2759100
Transcribed Image Text:Current Attempt in Progress Your answer is partially correct. On January 1, 2020, Skysong Corporation issued $5,410,000 of 10% bonds at 102 due December 31, 2029. Skysong paid $88,000 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, Skysong called one-half of the bonds and retired them. Ignoring income taxes, compute the amount of loss, if any, to be recognized by Skysong as a result of retiring the $2,705,000 of bonds in 2025. Loss on redemption Date January 2, 2025 $ 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.) Account Titles and Explanation Bonds Payable Premium on Bonds Payable -21640 Loss on Redemption of Bonds Cash Debit 2705000 32460 21640 Credit DOOD 2759100
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