Tolkien Company has $15,200 of 10% bond debentures outstanding. The bonds matures June 1, 2025. The company decides to retire the bonds 4 years before their maturity and buys all of them on the open market for 103 on June. The bonds were originally issued at par. Required 1: What is the amount of cash paid by Tolkien Company when retiring the bonds? Do not include interest on last coupon. $ Required 2: What is the gain (loss) on bond retirement to be recognized in the books? If it is a loss, make it negative and use the minus sign "-". $ Required 3: If Tolkien Company prepares its annual financial statements on March 31st, what is the amount of interest payable to report if the last semi-annual coupon was paid on December 31st? $

Tolkien Company has $15,200 of 10% bond debentures outstanding. The bonds matures June 1, 2025. The company decides to retire the bonds 4 years before their maturity and buys all of them on the open market for 103 on June. The bonds were originally issued at par. Required 1: What is the amount of cash paid by Tolkien Company when retiring the bonds? Do not include interest on last coupon. $ Required 2: What is the gain (loss) on bond retirement to be recognized in the books? If it is a loss, make it negative and use the minus sign "-". $ Required 3: If Tolkien Company prepares its annual financial statements on March 31st, what is the amount of interest payable to report if the last semi-annual coupon was paid on December 31st? $

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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The company closes its books on December 31: Lemon Co. sells $1,00,000 of 10% bonds on August 1, 2020. The bonds oay interest on February 1 and August 1. The due date of the bonds is August 1, 2023. The bonds yield 12%. On October 1, 2021, Lemon Co. buys back $200,000 worth of bonds for $218,000 (includes accrued interest). Give entries through February 1, 2022. For the case prepare all of the relevant journal entries from the time of sale until the date indicated. Use the effective-interest method for discount and premium amortization (construct amortization tables where applicable). Amortize premium or discount on interest dates and at year-end. (Assume that no reversing entries were made)
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