Question

671. On Jan. 1, 2022 Gatorade issued 10-year, 200,000 bonds for 95. the bonds have a...

671. On Jan. 1, 2022 Gatorade issued 10-year, 200,000 bonds for 95. the bonds have a stated rate of 8% and pay interest annually on Dec.31 each year. One year after issue date on Jan. 1, 2023 Gatorade retires the $200,000 bonds by repurchasing them in the market for $194,000. what is the gain or loss if they use straight line amortization?

Homework Answers

Answer #1

The Answer is Loss on Redemption on Bonds = $ 3,000

Working:

Jan. 1, 2023 Bonds Payable $        200,000
Loss on Redemption of Bonds [194000+9000-200000] $            3,000
Discount on Bond Payable (Unamortized) [(200000-(200000*0.95)) / 10 Years * 9 Years] $            9,000
Cash $        194,000
( To record Bond Redemption)
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