Question

3. The Scotia Company issues $100,000, 10% bonds at 102 on April 1, 2020. The bonds...

3. The Scotia Company issues $100,000, 10% bonds at 102 on April 1, 2020. The bonds are dated January 1, 2020 and mature ten years from that date. Straight-line amortization is used. Interest is paid annually each December 31. Compute the bond carrying value as of December 31, 2027. Answer $_______________ 4. At December 31, 2020, the following balances existed for AAA Corporation: Bonds Payable (4%) $500,000 Discount on Bonds Payable 10,000 The bonds mature on 12/31/27. Straight-line amortization is used. If 30% of the bonds are retired at 105 on January 1, 2024, what is the gain or loss on early extinguishment? Answer $_______________ Required: Compute the answer for each of the four problems. Show supporting computation. No need to show questions.

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Solution: $100,400

Working:

Date

Bonds Payable Bal.

Premium paid

Beginning BV

Interest

Premium

Interest

Premium on

Closing

(a)

(b)

(c ) = (a) + (b)

(a) * 10%)

amortization

payable

bonds payable

Book value

01-Jan-20

100,000

2,000

102,000

0

0

0

2,000

102,000

31-Dec-20

100,000

2,000

102,000

10,000

200

9,800

1,800

101,800

31-Dec-21

100,000

1,800

101,800

10,000

200

9,800

1,600

101,600

31-Dec-22

100,000

1,600

101,600

10,000

200

9,800

1,400

101,400

31-Dec-23

100,000

1,400

101,400

10,000

200

9,800

1,200

101,200

31-Dec-24

100,000

1,200

101,200

10,000

200

9,800

1,000

101,000

31-Dec-25

100,000

1,000

101,000

10,000

200

9,800

800

100,800

31-Dec-26

100,000

800

100,800

10,000

200

9,800

600

100,600

31-Dec-27

100,000

600

100,600

10,000

200

9,800

400

100,400

As per policy we have to answer first question

Add a comment
Know the answer?
Add Answer to:
3. The Scotia Company issues $100,000, 10% bonds at 102 on April 1, 2020. The bonds...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • The Scotia Company issues $100,000, 10% bonds at 102 on April 1, 2020. The bonds are...

    The Scotia Company issues $100,000, 10% bonds at 102 on April 1, 2020. The bonds are dated January 1, 2020 and mature ten years from that date. Straight-line amortization is used. Interest is paid annually each December 31. Compute the bond carrying value as of December 31, 2027. I keep receiving the wrong computation for this question! Can somebody please include the 3 months because this bond is issued on April 1st. Please please show the correct computation, thank you.

  • The Scotia Company issues $100,000, 10% bonds at 102 on April 1, 2020. The bonds are...

    The Scotia Company issues $100,000, 10% bonds at 102 on April 1, 2020. The bonds are dated January 1, 2020 and mature ten years from that date. Straight-line amortization is used. Interest is paid annually each December 31. Compute the bond carrying value as of December 31, 2027.

  • The Scotia Company issues $100,000, 10% bonds at 102 on April 1, 2020. The bonds are...

    The Scotia Company issues $100,000, 10% bonds at 102 on April 1, 2020. The bonds are dated January 1, 2020 and mature ten years from that date. Straight-line amortization is used. Interest is paid annually each December 31. Compute the bond carrying value as of December 31, 2027.

  • 4. At December 31, 2020, the following balances existed for AAA Corporation: Bonds Payable (4%) $500,000...

    4. At December 31, 2020, the following balances existed for AAA Corporation: Bonds Payable (4%) $500,000 Discount on Bonds Payable 10,000 The bonds mature on 12/31/27. Straight-line amortization is used. If 30% of the bonds are retired at 105 on January 1, 2024, what is the gain or loss on early extinguishment? Answer $_______________ Required: Compute the answer for each of the four problems. Show supporting computation. No need to show questions.

  • On January 1, 2018, QLI Corp. issued $700,000 Face Value, 10% bonds for $880,000 These bonds...

    On January 1, 2018, QLI Corp. issued $700,000 Face Value, 10% bonds for $880,000 These bonds were to mature on December 31, 2027, but were callable at a price of 96 any time after December 31, 2020. Interest was payable semiannually on June 30 and December 31. Bond Issue Costs were $10,000. On July 1, 2024, QLI called and re-purchased $420,000 Face Value of the bonds for a price of 96 and retired them. Bond premium or discount is amortized...

  • On January 1, 2013, Swifty Corporation issued 2100 of its 10%, $1,000 bonds for $2184000. These...

    On January 1, 2013, Swifty Corporation issued 2100 of its 10%, $1,000 bonds for $2184000. These bonds were to mature on January 1, 2023 but were callable at 101 any time after December 31, 2016. Interest was payable semiannually on July 1 and January 1. On July 1, 2018, Swifty called all of the bonds and retired them. Bond premium was amortized on a straight-line basis. Before income taxes, Swifty's gain or loss in 2018 on this early extinguishment of...

  • On January 1, 2013, Sheffield Corp. issued 3100 of its 10%, $1,000 bonds for $3224000. These...

    On January 1, 2013, Sheffield Corp. issued 3100 of its 10%, $1,000 bonds for $3224000. These bonds were to mature on January 1, 2023 but were callable at 101 any time after December 31, 2016. Interest was payable semiannually on July 1 and January 1. On July 1, 2018, Sheffield called all of the bonds and retired them. Bond premium was amortized on a straight-line basis. Before income taxes, Sheffield's gain or loss in 2018 on this early extinguishment of...

  • On January 1, 2016, Bonita Industries issued 3900 of its 10%, $1,000 bonds for $4056000. These...

    On January 1, 2016, Bonita Industries issued 3900 of its 10%, $1,000 bonds for $4056000. These bonds were to mature on January 1, 2026 but were callable at 101 any time after December 31, 2019. Interest was payable semiannually on July 1 and January 1. On July 1, 2021, Bonita called all of the bonds and retired them. Bond premium was amortized on a straight-line basis. Before income taxes, Bonita's gain or loss in 2021 on this early extinguishment of...

  • Champion Oil issued 10-year bonds dated January 1, 2020. The bonds were issued on March 1,...

    Champion Oil issued 10-year bonds dated January 1, 2020. The bonds were issued on March 1, 2020, with accrued interest. Interest was payable on the bonds on January 1 and July 1 of each year. The company's year-end was December 31. Champion followed ASPE and chose to use the straight-line amortization method. On May 31, 2023, Champion retired a portion of the bond issue, paying any accrued interest at that date. Addtional information pertaining to the bond issue follows: Face...

  • Popper Corp. issues 8% bonds at 96 on January 1, 2019. The bonds have a face...

    Popper Corp. issues 8% bonds at 96 on January 1, 2019. The bonds have a face value of $10,000,000, pay coupons semiannually on June 30 and December 31, and mature in 10 years. Popper uses straight-line amortization for discounts and premiums. Accordingly, at December 31, 2021, the unamortized discount is $280,000. On October 1, 2022, Popper invokes a call option and extinguishes the bonds at 102 plus accrued interest. How much gain or loss should Popper recognize on the early...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT