Question

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 bonds and redeemed them. Ignoring income taxes, compute the amount of loss, if any, to be recognized by Blossom as a result of retiring the $1,320,000 of bonds in 2017. (Round answer to 0 decimal places, e.g. 38,548.) 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
Discount on issuance 22000 = 2200000*(1-0.99)
Unamortized discount on January 2, 2017 11000 =22000*5/10
Unamortized discount relating to Bonds redeemed 6600 =11000*1320000/2200000
Carrying value of Bonds redeemed 1313400 =1320000-6600
Cash paid for redemption 1346400 =1320000*1.02
Less: Carrying value of Bonds redeemed 1313400
Loss on redemption 33000
Journal entry:
Bonds payable 1320000
Loss on redemption of bonds 33000
         Discount on bonds payable 6600
         Cash 1346400
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, 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, 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...
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, 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 September 30, 2012, Blossom Company issued 9% bonds with a par value of $470,000 due...
On September 30, 2012, Blossom Company issued 9% bonds with a par value of $470,000 due in 20 years. They were issued at 98 and were callable at 105 at any date after September 30, 2017. Because Blossom Company was able to obtain financing at lower rates, it decided to call the entire issue on September 30, 2018, and to issue new bonds. New 8% bonds were sold in the amount of $740,000 at 103; they mature in 20 years....
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...
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...
Extinguishment of Bonds Prior to Maturity On December 1, 2014, Cone Company issued its 10%, $480,000...
Extinguishment of Bonds Prior to Maturity On December 1, 2014, Cone Company issued its 10%, $480,000 face value bonds for $560,000, plus accrued interest. Interest is payable on November 1 and May 1. On December 31, 2016, the book value of the bonds, inclusive of the unamortized premium, was $510,000. On July 1, 2017, Cone reacquired the bonds at 98 plus accrued interest. Cone appropriately uses the straight-line method for the amortization because the results do not materially differ from...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT
Active Questions
  • Suppose the sale price of a used car can be predicted by a function f(x, y)...
    asked 31 minutes ago
  • Which of the following is the most effective approach to delinquency prevention: psychosocial development or punishment?...
    asked 44 minutes ago
  • You are testing the null hypothesis that there is no linear relationship between two​ variables, X...
    asked 1 hour ago
  • Using Microsoft Excel functions: 1. A machine will cost $50,000 to purchase. Annual operating cost will...
    asked 1 hour ago
  • Please, edit for clarity and conciseness, for grammar, capitalization, punctuation, abbreviation, number style, word division, and...
    asked 1 hour ago
  • Suppose your body was able to use chemical energy in gasoline. How far could you pedal...
    asked 1 hour ago
  • Consider why persons with disabilities are considered a vulnerable population. Share with others experiences you may...
    asked 1 hour ago
  • find the explicit particular solution of the initial value problem 2*x^1/2(dy/dx)=(cos^2)*y y(4)=pi/4 differntial equations
    asked 2 hours ago
  • Soma recorded in the table the height of each player on the basketball team Basketball Players’...
    asked 2 hours ago
  • Program: 6: Function overloading AIM: To write a C++ program to illustrate the concept of function...
    asked 2 hours ago
  • Alumina Ltd. produces a specialty aluminum product, and has the following information available concerning its inventory...
    asked 2 hours ago
  • Write approximately 1,750-2,000 words addressing the following questions: How has globalization impacted health care in the...
    asked 2 hours ago