On January 2, 2015, Marin Corporation issued $2,150,000 of 10% bonds at 98 due December 31,...
On January 2, 2015, Marin Corporation issued $2,150,000 of 10%
bonds at 98 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, Marin called $1,290,000 face amount of the
bonds and redeemed them.
Ignoring income taxes, compute the amount of loss, if any, to be
recognized by Marin as a result of retiring the $1,290,000 of bonds
in 2020. (Round answer to 0 decimal places, e.g.
38,548.)
| Loss on redemption | $
|
Prepare the journal entry to record the redemption.
(Round answers to 0 decimal places, e.g. 38,548. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts. Credit account titles are automatically
indented when amount is entered. Do not indent
manually.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|---|---|---|---|
|
January 2, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Homework Answers
Issue price of bonds = 2150000*.98 = 2107000
Discount on bonds payable = 2150000-2107000 = 43000
Unamortized discount = 43000/2 = 21500
Carrying value of bonds on January 1,2020 = 2107000+21500 = 2128500
Carrying value of 1290000 = 2128500/2150000*1290000 = 1277100
a) Loss on bond redemption = 1277100-(1290000*1.01) = -25800
b) Journal entry
| Date | account and explanation | Debit | Credit |
| Jan 2,2020 | Bonds payable | 1290000 | |
| Loss on redemption | 25800 | ||
| Discount on bonds payable | 12900 | ||
| Cash | 1302900 |
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On January 2, 2015, Marin Corporation issued $2,150,000 of 10%
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On January 2, 2012, Waterway Corporation issued $1,100,000 of
10% bonds at 98 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
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The bonds are callable at 101 (i.e., at 101% of face amount), and
on January 2, 2017, Waterway called $660,000 face amount...
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bonds at 98 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, Concord called $1,350,000 face amount of the...
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On January 2, 2015, Stellar Corporation issued $1,550,000 of 10%
bonds at 98 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
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