On January 1, year 15, Hart, Inc. redeemed its 15-year bonds of $500,000 par value for 102. They were originally issued on January 1, year 3 at 98 with a maturity date of January 1, year 18. The bond issue costs relating to this transaction were $20,000. Hart amortizes discounts, premiums, and bond issue costs using the straight-line method. What amount of loss should Hart recognize on the redemption of these bonds? O $16,000 O $12,000 O $0 O $10,000

On January 1, year 15, Hart, Inc. redeemed its 15-year bonds of $500,000 par value for 102. They were originally issued on January 1, year 3 at 98 with a maturity date of January 1, year 18. The bond issue costs relating to this transaction were $20,000. Hart amortizes discounts, premiums, and bond issue costs using the straight-line method. What amount of loss should Hart recognize on the redemption of these bonds? O $16,000 O $12,000 O $0 O $10,000

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 14MC: Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the...

See similar textbooks

Related questions

Q: How is ARR calculated?

A: ARR: Accounting Rate of Return (ARR) is the rate of return earned on the investment made in a…

Q: Explain IO and PO Strips?

A: Interest only (IO) strips are a financial product shaped by unraveling the principal and interest…

Q: What are ADRs?

A: Answer: An American depositary receipt (ADR) is a negotiable asset that denotes a non-US company…

Q: What are IO and PO strips?

A: Mortgage-backed securities: The financial instruments intended in raising investment which is…

Q: Examples of CIRO and PIRO

A: Example of CIRO: A note book valued at $5 CAD is being transported through courier would be exempt…

Q: What is FIFO?

A: FIFO is a type of inventory management system where stock purchased earlier will be sold first and…

Q: A figured out

A: Pre determined Overhead rate Calculation Overhead cost $ 28,80,000 Divided By Direct…

Q: What is BATNA?

Q: How to calculate PMT, P/Y and C/Y

A: As per the given information: The time value of money concept states that earlier receipts are more…

Q: Identify the gragh?

A: Part a: Total direct material cost increases or decreases in direct proportion to change in activity…

Q: What general Occurrence and siz

A: Internal Control: Internal control refers to the policies, and plans of the business organization…

Q: How to calcualte IRR

A: It stands for the discount rate at which cash flows' net present value (NPV) drops to zero.…

Q: Define white knight

A: A white knight is hostile acquisition security by which a 'friendliness' person or business who…

Q: how to calculate appiled averhead

A: Applied overhead: It includes indirect costs that cannot be directly applied to the product such as…

Q: What is PNL?

A: The term PNL is used in accounting, finance, and business to refer profit and loss.

Q: Describe about the NOL.

A: NOL means Net Operating Loss. This is a situation when company's deductions are more than it's…

Q: count ROCE

A: ROCE stands for Return on Capital Employed.

Q: What is a CMO?

A: A collateralize mortgage obligation (CMO) refers to a type of mortgage-backed security that contains…

Q: can you solve by ansewring the question'a in a fromual.

A: Data given: Costs of house(Purchase price) =$250,000 Down payment = 2% of the purchase price.…

Question

Vala

On January 1, year 15, Hart, Inc. redeemed its 15-year bonds of $500,000 par value for 102.
They were originally issued on January 1, year 3 at 98 with a maturity date of January 1, year 18.
The bond issue costs relating to this transaction were $20,000. Hart amortizes discounts, premiums, and bond issue costs using the
straight-line method.
What amount of loss should Hart recognize on the redemption of these bonds?
$16,000
$12,000
$0
O $10,000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction to bonds payable

VIEW

Step 2: Preparation of journal entry

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267
Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018, and received $540,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of premium
On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?
Edward Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable semiannually. The discount is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of discount
Eli Inc. issued $100,000 of 8% annual, 5-year bonds for $103,000. What is the total amount of interest expense over the life of the bonds?
Dixon Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $480,000. Interest is payable annually. The discount is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of discount D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of discount
Volunteer Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018 and received $540,000. Interest is payable annually. The premium is amortized using the straightline method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. June 30, 2019: entry to record payment of interest to bondholders C. June 30, 2019: entry to record amortization of premium D. June 30, 2020: entry to record payment of interest to bondholders E. June 30, 2020: entry to record amortization of premium
On January 1, 2018, Doty Co. redeemed its 15-year bonds of $7,000,000 par value for 102. They were originally issued on January 1, 2006 at 92 with a maturity date of January 1, 2021. Doty amortizes discounts and premiums using the straight-line method. What amount of loss should Doty recognize on the redemption of these bonds (ignore taxes)?
RR
The following are independent situations. 1. Wildhorse Co. redeemed $125,100 face value, 9% bonds on June 30, 2020, at 103. The carrying value of the bonds at the redemption date was $114,100. The bonds pay annual interest, and the interest payment due on June 30, 2020, has been made and recorded. prepare the appropriate journal entry for the redemption or conversion of the bonds.
Jacobs Company issued bonds with a $168,000 face value on January 1, Year 1. The bonds were issued at 105 and carried a 5-year term to maturity. They had a 9% stated rate of interest that was payable in cash on December 31st of each year. Jacobs uses the straight-line method to amortize bond discounts and premiums. Based on this information alone, how does the recognition of interest expense during Year 1 affect the company's accounting equation? Multiple Choice Decreases both assets and stockholders' equity by $13,440 Decreases stockholders' equity by $13,440, decreases liabilities $1,680, and decreases assets by $15,120 Increases liabilities by $1,680, decreases assets by $13,440, and decreases stockholders' equity by $15,120 Decreases both assets and stockholders' equity by $15,120
Assume that on January 1 of the current year, $100,000 of 5-year, 12% bonds, with interest payable semiannually, were sold for $103,769 (11% market rate). Give the account to be debited (1) and the amount and the account to be credited (2) and the amount to journalize the amortization of the premium using the straight- line method of amortization when the first interest payment is made on June 30. Round to the nearest whole dollar. JOURNA L Page 25 DATE DESCRIPTION P.REF. DEBIT CREDIT June 30 (1) ? (2) ? debit (1) Premium on Bonds Payable $376.90 and credit (2) Cash $736.90 debit (1) Premium on Bonds Payable $376.90 and credit (2) Interest Expense $376.90 debit (1) Premium on Bonds Payable $3,769 and credit (2) Discount on Bonds Payable $3,769 debit (1) Bonds Payable $3,769 and (2) credit Interest Expense $3,769