The following are two independent situations. 1. Crane Corporation redeemed $137,100 face value, 12% bonds on...

The following are two independent situations.

1.		Crane Corporation redeemed $137,100 face value, 12% bonds on June 30, 2020, at 108. The carrying value of the bonds at the redemption date was $123,600. The bonds pay annual interest, and the interest payment due on June 30, 2020, has been made and recorded.
2.		Tastove Inc. redeemed $153,000 face value, 17.50% bonds on June 30, 2020, at 98. The carrying value of the bonds at the redemption date was $155,000. The bonds pay annual interest, and the interest payment due on June 30, 2020, has been made and recorded.

For each independent situation above, prepare the appropriate journal entry for the redemption of the bonds. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
1.



2.

Expert Solution

Answer 1:

No	Account Titles and Explanation	Debit	Credit
1.	Bonds Payable	137,100
	Loss on Redemption of Bonds (Working)	24,468
	Discount on Bonds Payable ($137,100 - $123,600)		13,500
	Cash ($137,100 * 108%)		148,068
	(To record redemption of the bonds)

Working:

Loss on Redemption = Cash paid on redemption - Carrying value of the bonds at the redemption

= $148,068 - $123,600 = $24,468

Answer 2.

No	Account Titles and Explanation	Debit	Credit
2	Bonds Payable	153,000
	Premium on Bonds Payable ($153,000 - 155,000)	2,000
	Gain on Redemption of Bonds (Working)		5,060
	Cash ($153,000 * 98%)		149,940
	(To record redemption of the bonds)

Working:

Gain on Redemption of Bonds = Carrying value of the bonds at the redemption - Cash paid on redemption

= $155,000 - $149,940 = $5,060

ekkarill92 answered 3 years ago

1.Two independent situations follow: 1. Blossom Corporation redeemed $124,800 face value, 12% bonds on June 30,...

1.Two independent situations follow: 1. Blossom Corporation redeemed $124,800 face value, 12% bonds on June 30, 2017, at 101. The bonds’ amortized cost at the redemption date was $112,800. The bonds pay annual interest, and the interest payment due on June 30, 2017, has been made and recorded. 2. Pina Inc. redeemed $144,000 face value, 12.5% bonds on June 30, 2017, at 96. The bonds’ amortized cost at the redemption date was $144,960. The bonds pay annual interest, and the...

Sheridan Corporation redeemed $123,100 face value, 8% bonds on June 30, 2020, at 107

Exercise 15-08The following are two independent situations.1.Sheridan Corporation redeemed $123,100 face value, 8% bonds on June 30, 2020, at 107. The carrying value of the bonds at the redemption date was $109,100. The bonds pay annual interest, and the interest payment due on June 30, 2020, has been made and recorded.2.Tastove Inc. redeemed $144,000 face value, 15.00% bonds on June 30, 2020, at 96. The carrying value of the bonds at the redemption date was $146,000. The bonds pay annual...

On July 1, 2016, Malzone Corporation issued bonds with a face value of $200,000 and 12%...

On July 1, 2016, Malzone Corporation issued bonds with a face value of $200,000 and 12% interest payable semiannually. The bonds will mature on June 30, 2019. The market rate of interest at the time of issuance was 14%, so the bonds were issued at a discount of $14,107. Using the effective-interest method, the amount of discount that should be amortized by Malzone on December 31, 2016, is $ 846.42 $1,404.70 $1,012.51 $ 987.49 On January 1, 2007, Reed, Inc.,...

On January 1, 2017, Swifty Corporation sold 12% bonds with a face value of $2600000. The...

On January 1, 2017, Swifty Corporation sold 12% bonds with a face value of $2600000. The bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for $2800800 to yield 10%. Using the effective-interest method of amortization, interest expense for 2017 is a $280030. b $312000. c $260000. d $279282.

Question 1 The following are independent situations. Required For each of the two independent situations, identify...

Question 1 The following are independent situations. Required For each of the two independent situations, identify two control weaknesses, and explain the implications of these weaknesses for the company’s accounting records. (4 marks for each situation). Prepare your answer in the following format: Internal Control Weakness Implication for Company’s Accounting Records (Example only — no marks) The store does not use serially pre-numbered sales invoices. Sales invoices could be lost or omitted and sales would be understated. (Example only —...

Bats Corporation issued $800,000 of 12% face value bonds for $851,705.70. The bonds were dated and...

Bats Corporation issued $800,000 of 12% face value bonds for $851,705.70. The bonds were dated and issued on April 1, 2016, are due March 31, 2020, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any adjusting entries for the...

Several years ago, Timmons Company issued bonds with a face value of $1,000,000. It redeemed half...

Several years ago, Timmons Company issued bonds with a face value of $1,000,000. It redeemed half of the bonds at 99 on January 1, 2020. At that time, the total unamortized premium on the bond issue was $30,000. a) What is the reacquisition price of the bonds redeemed? b) What is the carrying value of the bonds redeemed? c) What is the gain or loss on redemption? d) Prepare the entry to record the redemption of the bonds. e) What...

The following are two independent situations. Situation 1 Whoo Cosmetics acquired 12% of the 200,000 shares...

The following are two independent situations. Situation 1 Whoo Cosmetics acquired 12% of the 200,000 shares of common stock of Loreal Fashion at a total cost of $15 per share on Oct. 18, 2018. On Oct. 30, Loreal declared and paid $60,000 cash dividend to all stockholders. On December 31, Loreal reported net income of $122,000 for the year. At December 31, the market price of Loreal Fashion was $12 per share. Situation 2 Peach Republic Group obtained significant influence...

Gupta Corporation issued four-year, 12% bonds with a total face value of $800,000 on January 1,...

Gupta Corporation issued four-year, 12% bonds with a total face value of $800,000 on January 1, 2018. Interest is paid semi-annually on June 30 and December 31. The market rate of interest on this date was 8%. Gupta uses the effective interest rate method. Required: Using Excel, determine the proceeds of the bond sale on 1/1/18. Using the present value of a dollar table (found in Appendix E of your text), what factor would you use to calculate the present...

On January 1, 2013, Queen Corporation issued 12-year, 6% bonds payable with a face value of...

On January 1, 2013, Queen Corporation issued 12-year, 6% bonds payable with a face value of $10 million. The bonds require semi-annual coupon payments on June 30 and December 31 every year. Fill in the blanks below to show the amounts and timing for contractual future cash flows for these bonds. Lump-sum payment due at maturity (FV) = _________ Amount of each semi-annual coupon payment (pmt) = ________ Number of compounding periods from issue date to maturity = _________ Total...

Question