Question
In: Accounting
At December 31, 2017, the following balances existed for Sweeney Corporation: Bonds Payable (10%) $1,500,000 Premium...
At December 31, 2017, the following balances existed for Sweeney Corporation:
|
Bonds Payable (10%) |
$1,500,000 |
|
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 is the loss on early extinguishment?
Solutions
Expert Solution
Total Bond Premium yet to be amortized = 40000
30% of this premium = 12000
Year 2018 amortization on these bonds 12000/5 = 2400
Premium yet to be amortized on these 30% bonds = 9600
Journal entry on retirement will be
Bonds Payable 1500000/100*30 = 450000
Premium on Bonds Payable = 9600
Loss on Early extinguishment (Bal. Fig.) = 12900
Cash 1500000/100*30*1.05 = 472500
ANSWER:
Loss on Early extinguishment (Bal. Fig.) 12900
ekkarill92 answered 1 year agoRelated Solutions
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