The 8% bonds payable of Sunland Company had a net carrying amount of $3010000 on December...
The 8% bonds payable of Sunland Company had a net carrying
amount of $3010000 on December 31, 2017. The bonds, which had a
face value of $3160000, were issued at a discount to yield 10%. The
amortization of the bond discount was recorded under the
effective-interest method. Interest was paid on January 1 and July
1 of each year. On July 2, 2018, several years before their
maturity, Sunland retired the bonds at 102. The interest payment on
July 1, 2018 was made as scheduled. What is the loss that Sunland
should record on the early retirement of the bonds on July 2, 2018?
Ignore taxes.
| $189100. |
| $168100. |
| $63200. |
| $210100. |
Homework Answers
Carrying value at December 31, 2017 = $3,010,000
Interest expense = $3,010,000 * 5% = $150,500
Interest payable = $3,160,000 * 4% = $126,400
Interest amortized = $150,500 - $126,400
= $24,100
Carrying value at July 2, 2018 = $3,010,000 + $24,100 = $3,034,100
Unamortized discount = $3,160,000 - $3,034,100
= $125,900
JOURNAL ENTRY
| Bonds payable | $3,160,000 | |
| Loss (plug) | $189,100 | |
| Cash | $3,223,200 ($3,160,000/$100*$102) | |
| Discount unamrtized | $125,900 |
The answer is $189,100
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Hi, I wanna know those questions how to solve step by step. I put solutions on...
Hi, I wanna know those
questions how to solve step by step.
I put solutions on the below, but I don't know where those
numbers came?
Is there any ways to calculate them more easily? Thank you.
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= $2,053,000 (CV of retired bonds)
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$4,036,000
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Hi, I wanna know those
questions how to solve step by step.
I put solutions on the below, but I don't know where those
numbers came?
Is there any ways to calculate them more easily? Thank you.
89. c [BC1]
= $2,053,000 (CV of retired bonds)
$2,053,000
– ($2,000,000 × .98) = $93,000.
90. b [BC2]
= $4,036,000 (CV of retired bonds)
$4,036,000
– ($4,000,000 .96) = $196,000.
91. b $2,850,000
+ [($2,850,000 × .06) – ($3,000,000 × .05)] = $2,871,000 (CV of
bonds)
$2,871,000...
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Problem 14-15 Early extinguishment; effective interest
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The long-term liability section of Twin Digital Corporation’s
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Disclosure notes indicate the bonds were issued to yield 16%.
Interest expense is recorded at the effective interest rate and
paid on January 1 and July 1 of each year. On July 1, 2018, Twin
Digital retired the bonds at 102...
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