Question
In: Accounting
Bonds Payable has a balance of $5,000,000 and Dis- count on Bonds Payable has a balance...
Bonds Payable has a balance of $5,000,000 and Dis- count on Bonds Payable has a balance of $150,000. If the issuing corporation redeems the bonds at 98, is there a gain or loss on the bond redemption?
Solutions
Expert Solution
| Answer: | Amount paid on redemption | $ 4,900,000.00 | ||
| Less: | Carrying Value of bonds | |||
| Outstanding balance of bonds payable | $ 5,000,000.00 | |||
| Less: Discount on issue of bonds | $ (150,000.00) | $ 4,850,000.00 | ||
| Loss on redemption of bonds | $ 50,000.00 | ($4,900,000-$4,850,000) | ||
| There would be loss on redemption of bonds $50,000. | ||||
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