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
$_______________
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 for $$3,805,200 to yield 8%. Scottsdale uses the effective-interest method of amortizing bond premium. Interest is payable annually on December 31. The 12/31/23 Premium on Bond Payable balance is:
Answer
$_______________
Solutions
Expert Solution
1)
Total Years remaining to maturity (31/12/2022-31/12/2028 )=6 years
Years to extinguishment (31/12/2022-1/1/2025)=2 years
Bond discount amortized for the period (31/12/2022-1/1/2025) = Unamortized bond discount * n/ years to maturity
= 50000 *2/6
= 16666.66667
Unamortized bond discount as on 1/1/2025 = 50000-16666.66667 = 33333.33333
carrying value of bond =Par value -unamortized discount
= 600000 -33333.33333
= 566666.66667
Amount of bond extinguished = carrying value * %
= 566666.66667 *60%
= 340000
Amount paid = par value *% of bond extinguished * price/ 100
= 600000 * 60%*104 /100
= 374400
Gain on early extinguishment = amount paid - carrying value of bond extinguished
= 374400 -340000
= 34400
2)
| Period ended | Interest paid {Face value*stated rate} [i] | Interest expense [ii] | Premium amortized [i-ii] | Unamortized premium | carrying value of bond {Face value+unamortized premium] |
| 1/1/2020 | 805200 {3805200-3000000} | 3805200 | |||
| 31/12/2020 | 360000 {3000000*.12} | 3805200*.08=304416 | 55584 | 805200-55584= 749616 | 3000000+749616 =3749616 |
| 31/12/2021 | 360000 | 3749616*.08= 299969.28 | 60030.72 | 749616-60030.72= 689585.28 | 3000000+689585.28= 3689585.28 |
| 31/12/2022 | 360000 | 3689585.28*.08= 295166.82 | 64833.18 | 689585.28-64833.18= 624752.10 | 3000000+624752.1= 3624752.10 |
| 31/12/2023 | 360000 | 3624752.10*.08= 289980.17 | 70019.83 | 624752.10-70019.83=554732.27 | 3000000+554732.27=3554732.27 |
premium on bond payable 12/31/23 = 554,732 .27 (rounded to 554732)
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
$_______________
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, 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?
The ledger of a company contained the following account balances on December 31: Accounts Payable $...
The ledger of a company contained the following account balances
on December 31:
Accounts Payable
$
15,200
Fees Income
$
190,000
Accounts Receivable
6,800
Supplies
5,200
Accumulated Depreciation
10,000
Prepaid Rent
66,000
Cash
92,000
Rent Expense
10,000
Depreciation Expense
10,000
Supplies Expense
9,200
Equipment
80,000
Teresa Davis, Capital
138,400
Teresa Davis, Drawing
58,000
Utilities Expense
16,400
All the accounts have normal balances. Prepare the December 31
closing entries.
The December 31, 2017, balance sheet of Hess Corporation includes the following items: 9% bonds payable...
The December 31, 2017, balance sheet of Hess Corporation
includes the following items:
9% bonds payable due December 31, 2026 $5,000,000
Unamortized premium on bonds payable 135,000
The bonds were issued on December 31, 2016, at 103, with
interest payable on July 1 and December 31 of each year. Hess uses
straight-line amortization. On March 1, 2018, Hess retired
$2,000,000 of these bonds at 98 plus accrued interest. What should
Hess record as a gain on retirement of these bonds?...
Metlock Company has the following balances in selected accounts on December 31, 2022. Accounts Receivable $...
Metlock Company has the following balances in selected
accounts on December 31, 2022.
Accounts Receivable
$ 0
Accumulated Depreciation—Equipment
0
Equipment
7,840
Interest Payable
0
Notes Payable
11,200
Prepaid Insurance
2,352
Salaries and Wages Payable
0
Supplies
2,744
Unearned Service Revenue
33,600
All the accounts have normal balances. The following
information has been gathered at December 31, 2022.
1. Metlock Company borrowed $11,200 by signing a 12%, one-year
note on September 1, 2022. Interest will be paid when the note...
Janson Corporation Co.'s trial balance included the following account balances at December 31, 2018: Accounts payable...
Janson Corporation Co.'s trial balance included the following
account balances at December 31, 2018:
Accounts payable
$25,600
Bond payable, due 2027
24,200
Salaries payable
17,700
Note payable, due 2019
20,100
Note payable, due 2023
41,300
What amount should be included in the current liabilities section
of Janson's December 31, 2018, balance sheet?
Janson Corporation Co.'s trial balance included the following
account balances at December 31, 2018:
Accounts payable
$25,600
Bond payable, due 2027
24,200
Salaries payable
17,700
Note payable, due...
On December 31, 2018, when the market interest rate is 8%, Arnold Corporation issues $200,000 of 6%, 10-year bonds payable
On December 31, 2018, when the market interest rate is 8%, Arnold Corporation issues $200,000 of 6%, 10-year bonds
payable. The bonds pay interest semiannually. Determine the present value of the bonds at issuance.
The following information is available for Kingbird Corporation for the year ended December 31, 2022. Beginning...
The following information is available for Kingbird Corporation
for the year ended December 31, 2022.
Beginning cash balance
$36,000
Accounts payable
decrease
3,000
Depreciation expense
85,000
Accounts receivable
increase
8,700
Inventory increase
14,100
Net income
298,500
Cash received for sale of
land at book value
36,000
Sales revenue
740,500
Cash dividends paid
11,500
Income tax payable
increase
4,200
Cash used to purchase
building
147,500
Cash used to purchase
treasury stock
38,800
Cash received from issuing
bonds
203,000
Prepare a statement...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Describe System Development Life Cycle (SDLC) and how it is used.
- What symbolism do you find in the play,Oedipus?
- • Using the Scanner class to obtain input from the user. • Using printf to output...
- In each of the following situations, develop a tentative plan for the client. List the various...
- MARGI sells different types of wine. Customers place orders to the most popular “Summer Wine” at...
- Java. If possible please put explanations for each line of code. Write a test program that...
- . Use the following information to calculate your company's expected return State Probability Return Boom 20%...
ADVERTISEMENT