Question

At December 31, 2022, the following balances existed for MICPA Corporation: Bonds Payable (6%) $600,000 Discount...

  1. 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

$_______________

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Answer #1
A Face value of bond outstanding as at December 31,2022                   600,000
B % of bonds early retired 60%
C=A*B Value of bond retired                   360,000
D=C*104% Bond being retired at an value of $ 104                   374,400
E=C-D Loss on early retirement of bonds                   (14,400)
F Premium not amortized yet (60% X 50000)/3 10000
Loss on early retirement of bonds (4400)
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