Question

7 of 7 (0 complete) HW Score: 0%, 0 of 100 pts core: 0 of 20 pts E9-19A (similar to) en Question Help On January 1, 2017, Bronson Corporation issued five-year, 6% bonds payable with a face value of $2,600,000. The bonds were issued at 87 and pay interest on January 1 and July 1. Bronson amortizes bond discounts using the straight-line method. On December 31, 2019, Bronson retired the bonds early by purchasing them at a market price of 92. The company's fiscal year ends on December 31. Read the requirements. Requirement 1. Journalize the issuance of the bonds on January 1, 2017. (Record debits first, then credits. Exclude explanations from any journal entries.) Journal Entry Accounts Debit Credit Date 2017 i Requirements Jan 1 1. Journalize the issuance of the bonds on January 1, 2017. 2. Record the semiannual interest payment and amortization of bond discount on July 1, 2017 Record the interest accrual and discount amortization on December 31, 2017 4. Calculate the carrying value of the bonds payable on December 31, 2019, prior to their retirement. 5. Calculate the gain or loss on the retirement of the bonds payable on December 31, 2019. Indicate where this gain or loss will appear in the financial statements. Print Done] Choose from any list or enter any number in the input fields and then click Check Answer. parts + remaining Clear All Check Answer

Answer 1

Solution 1:

Journal Entries - Bronson Corporation
Date	Particulars	Debit	Credit
1-Jan-17	Cash Dr	$2,262,000.00
	Discount on bond payable Dr	$338,000.00
	To Bonds payable		$2,600,000.00
	(To record issue of bond at discount)

Solution 2 & 3:

Journal Entries - Bronson Corporation
Date	Particulars	Debit	Credit
1-Jul-17	Interest Expense Dr	$111,800.00
	To Discount on bond payable ($338,000/10)		$33,800.00
	To Cash		$78,000.00
	(Being first semiannual interest payment made and discount amortized)
31-Dec-17	Interest Expense Dr	$111,800.00
	To Discount on bond payable		$33,800.00
	To Interest payable		$78,000.00
	(To record interest accrual and discount amortization)

Solution 4:

Carrying value of bond on 31.12.2019 = Face value - Unamortized discount

= $2,600,000 - ($33,800*4)

= $2,464,800

Solution 5:

Retirement value of bond = $2,600,000*92% = $2,392,000

Gain on retirement = (Carrying value + Interest payable) - Retirement value

= ($2,464,800 + $78,000) - $2,392,000 = $150,800

Gain will appear in income statement.