MSG Corporation issued $102,000 of 3-year, 5% bonds outstanding on December 31, 2020 for $107,000. The...
MSG Corporation issued $102,000 of 3-year, 5% bonds outstanding on December 31, 2020 for $107,000. The bonds pay interest annually and MSG uses straight-line amortization. On May 1, 2021, $10,200 of the bonds were retired at 112. As a result of the retirement, MSG will report: (Do not round intermediate calculations and round final answer to nearest whole dollar.)
Multiple Choice
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a $724 loss.
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a $780 loss.
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a $1,448 loss.
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a $1,448 gain.
Homework Answers
| Issue price of $10,200 bonds | 10700 | =107000/102000*10200 |
| Premium on issue | 500 | =10700-10200 |
| Premium amortization for 4 months | 56 | =500/3*4/12 |
| Carrying value on May 1 | 10644 | =10700-56 |
| Bond redemption price | 11424 | =10200*1.12 |
| Less: Carrying value on May 1 | 10644 | |
| Loss on redemption | 780 | loss |
| Option B a $780 loss is correct option |
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