Question

On January 2, 2015, L Corporation issued $2,050,000 of 10% bonds at 96 due December 31, 2024. Interest on the bonds is payable annually each December 31. The discount 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 101 (i.e., at 101% of face amount), and on January 2, 2020, L Corp. called $1,230,000 face amount of the bonds and redeemed them.

Ignoring income taxes, compute the amount of loss, if any, to be recognized by L Corp. as a result of retiring the $1,230,000 of bonds in 2020. (Round answer to 0 decimal places, e.g. 38,548.)

Loss on redemption

$enter a dollar amount of loss on redemption rounded to 0 decimal places

Prepare the journal entry to record the redemption. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
January 2, 2020	enter an account title to record the transaction on January 2, 2017	enter a debit amount	enter a credit amount
	enter an account title to record the transaction on January 2, 2017	enter a debit amount	enter a credit amount
	enter an account title to record the transaction on January 2, 2017	enter a debit amount	enter a credit amount
	enter an account title to record the transaction on January 2, 2017	enter a debit amount	enter a credit amount

Answer 1

Answer is given below with working notes. Amortization schedule is also given

Proportionate value is taken for carrying value of bonds and Discount on issue of bonds