Question

On January 2, 2012, Flounder Corporation issued $ 2,050,000 of 10% bonds at 96 due December...

On January 2, 2012, Flounder Corporation issued $ 2,050,000 of 10% bonds at 96 due December 31, 2021. 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, 2017, Flounder 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 Flounder as a result of retiring the $ 1,230,000 of bonds in 2017

Loss on Redemption=

Prepare the journal entry to record the redemption

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Issue Price 1968000 (2050000*0.96)
Discount amount 82000
Unamortized portion 41000
Unamortized portion for redeemed bonds 24600
Calculation of Loss on Redemption
Redemption value 1242300
Unamortized discount 24600
Less: Bond face value 1230000
Loss on Redemption 36900
Date Account title and Explanation Debit Credit
Bond payable 1230000
Loss on redemption of bond 36900
Unamortized discount on Bond 24600
Cash 1242300
(To record Redemption)
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On January 2, 2015, Flint Corporation issued $2,050,000 of 10% bonds at 96 due December 31,...
On January 2, 2015, Flint 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, Flint called $1,230,000 face amount of the...
On January 2, 2012, Blossom Corporation issued $2,200,000 of 10% bonds at 99 due December 31,...
On January 2, 2012, Blossom Corporation issued $2,200,000 of 10% bonds at 99 due December 31, 2021. 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 102 (i.e., at 102% of face amount), and on January 2, 2017, Blossom called $1,320,000 face amount of the...
On January 2, 2012, Oriole Corporation issued $2,000,000 of 10% bonds at 99 due December 31,...
On January 2, 2012, Oriole Corporation issued $2,000,000 of 10% bonds at 99 due December 31, 2021. 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 102 (i.e., at 102% of face amount), and on January 2, 2017, Oriole called $1,200,000 face amount of the...
On January 2, 2015, Larkspur Corporation issued $1,400,000 of 10% bonds at 96 due December 31,...
On January 2, 2015, Larkspur Corporation issued $1,400,000 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, Larkspur called $840,000 face amount of the...
On January 2, 2014, Bengro Corporation issued $4,500,000 of 10% bonds at 96 due December 31,...
On January 2, 2014, Bengro Corporation issued $4,500,000 of 10% bonds at 96 due December 31, 2023. 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 “effective interest method.”) The bonds are callable at 102 (i.e., at 102% of face amount), and on January 2, 2020, Bengro called all of the bonds...
1. On January 1, 2018, Banno Corporation issued $1,500,000 Face Value of 10% coupon bonds at...
1. On January 1, 2018, Banno Corporation issued $1,500,000 Face Value of 10% coupon bonds at a price of 103, due December 31 2027. Interest on the bonds is payable annually each December 31. The premium on the bond is being amortized on a straight-line basis over the ten years (Straight-line is not materially different in effect from the preferred effective interest method). The bonds are callable at a price of 100 ½ and on January 1, 2024, called all...
On January 2, 2016, Prebish Corporation issued $1,500,000 of 10% bonds to yield 11% due December...
On January 2, 2016, Prebish Corporation issued $1,500,000 of 10% bonds to yield 11% due December 31, 2025. Interest on the bonds is payable annually, each December 31. The bonds are callable at 101 (i.e., at 101% of the face amount) and on January 2, 2019, Prebish called $1,500,000 face amount of the bonds and retired them. (100 POINTS) Instructions Determine the price of the Prebish bonds, when issued on January 2, 2016. Prepare an Amortization Schedule for 2016-2020 for...
On January 1, 2012, Concord Corporation issued $18000000 of 9% ten-year bonds at 102. The bonds...
On January 1, 2012, Concord Corporation issued $18000000 of 9% ten-year bonds at 102. The bonds are callable at the option of Concord at 104. Concord has recorded amortization of the bond premium on the straight-line method (which was not materially different from the effective-interest method). On December 31, 2018, when the fair value of the bonds was 95, Concord repurchased $3980000 of the bonds in the open market at 95. Concord has recorded interest and amortization for 2018. Ignoring...
1. On January 2, 2020, Drambuie Corp. issued $1,000,000 of 6% bonds at $865,795 due December...
1. On January 2, 2020, Drambuie Corp. issued $1,000,000 of 6% bonds at $865,795 due December 31, 2029. The market rate of interest was 8% and interest on the bonds are payable annually each December 31. The discount on the bonds is being amortized on an effective interest basis. The bonds are callable at 101 and on January 1, 2022, Drambuie called the bonds and retired them. A. Compute the gain or loss on the early retirement of the bonds...
On January 1, 2017, Flounder Corporation issued $1,650,000 face value, 8%, 10- year bonds at $1,447,229....
On January 1, 2017, Flounder Corporation issued $1,650,000 face value, 8%, 10- year bonds at $1,447,229. This price resulted in an effective-interest rate of 10% on the bonds. Flounder uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest January 1. Prepare an amortization table through December 31, 2019 (three interest periods) for this bond issue.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT