Question
In: Accounting
At December 31, 2022, the following balances existed for MICPA Corporation: Bonds Payable (6%) $600,000 Discount...
- At December 31, 2022, the following balances existed for MICPA Corporation:
|
Bonds Payable (6%) |
$600,000 |
|
Discount on Bonds Payable |
50,000 |
The bonds mature on 12/31/28. Straight-line amortization is used.
If 60% of the bonds are retired at 104 on January 1, 2025, what is the gain or loss on early extinguishment?
Answer
$_______________
Solutions
Expert Solution
Answer :-
Loss on early extinguishment = $9,400
Explanations :-
Total Bond Premium yet to be amortized = $50,000
60% of this premium = $50,000 × 60%
= $30,000
.
Annual amortization on these bonds 30,000 / 6Years
= $5,000
.
Journal entry on retirement will be:
Bonds Payable ($600,000 × 60%)...................Dr. $360,000
Premium on Bonds Payable .........................Dr. $5,000
Loss on Early extinguishment (Bal. Fig.)..........Dr. $9,400
To Cash ($600,000 × 60% × 104%)............Cr. $374,400
Alternatively,
.
Loss on early extinguishment = Cash paid on retirement - Book value
= ($600,000 × 60% × 104%) - (Face value + Premium not amortized yet)
= ($600,000 × 60% × 104%) - [($600,000 × 60%) + $5,000]
= $374,400 - [$360,000 + $5,000]
= $374,400 - $3,65,000
Loss on early extinguishment = $9,400
ekkarill92 answered 1 year agoRelated Solutions
At December 31, 2022, the following balances existed for MICPA Corporation: Bonds Payable (6%) $600,000 Discount...
At December 31, 2022, the following balances existed for MICPA
Corporation:
Bonds Payable (6%)
$600,000
Discount on Bonds Payable
50,000
The bonds mature on 12/31/28. Straight-line amortization is
used.
If 60% of the bonds are retired at 104
on January 1, 2025, what is the gain or loss on early
extinguishment?
Answer
$_______________
2.
On January 1, 2020, Scottsdale Company issued its 12% bonds in
the face amount of $3,000,000, which mature on January 1, 2030. The
bonds were issued...
At December 31, 2022, the following balances existed for MICPA Corporation: Bonds Payable (6%) $600,000 Discount...
At December 31, 2022, the following balances existed for MICPA
Corporation:
Bonds Payable (6%)
$600,000
Discount on Bonds Payable
50,000
The bonds mature on 12/31/28. Straight-line amortization is
used.
If 60% of the bonds are retired at 104
on January 1, 2025, what is the gain or loss on early
extinguishment?
Answer
$_______________
2.
On January 1, 2020, Scottsdale Company issued its 12% bonds in
the face amount of $3,000,000, which mature on January 1, 2030. The
bonds were issued...
At December 31, 2022, the following balances existed for MICPA Corporation: Bonds Payable (6%) $600,000 Discount...
At December 31, 2022, the following balances existed for MICPA
Corporation:
Bonds Payable (6%)
$600,000
Discount on Bonds Payable
50,000
The bonds mature on 12/31/28. Straight-line amortization is
used.
If 60% of the bonds are retired at 104
on January 1, 2025, what is the gain or loss on early
extinguishment?
Answer
$_______________
2.
On January 1, 2020, Scottsdale Company issued its 12% bonds in
the face amount of $3,000,000, which mature on January 1, 2030. The
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Premium on Bonds Payable
40,000
The bonds mature on 12/31/22. Straight-line amortization is
used.
If 30% of the bonds are retired at 105 on January 1, 2019, what
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190,000
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5,200
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10,000
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Supplies
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41,300
What amount should be included in the current liabilities section
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Janson Corporation Co.'s trial balance included the following
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Bond payable, due 2027
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Salaries payable
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On December 31, 2018, when the market interest rate is 8%, Arnold Corporation issues $200,000 of 6%, 10-year bonds payable
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