Question

calculate the gain or loss of the retirmentent bonds payable on december 31, 2019

nu Score: 1.91 of 2 pts 3 of 6 (5 complete) HW Score: 39.26%, 5.89 of 15 pts Ad E9-28B (similar to) Question Help Ind inly On January 1, 2017, Franklin Corporation issued five year, 6% bonds payable with a face value of $2,000,000. The bonds were issued at 92 and pay interest on January 1 and July 1. Franklin amortizes bond discounts using the straight-line method On December 31, 2019, Franklin retired the bonds early by purchasing them at a market price of 95. The company's fiscal year ends on December 31 Read the requirements Requirement 3. Record the interest accrual and discount amortization on December 31, 2017. (Record debits first, then credits. Exclude explanations from any journal entries.) Journal Entry Accounts Debit Credit Date 2017 Dec 31 76,000 Interest Expense Discount on Bonds Payable Interest Payable 16,000 60,000 Requirement 4. Calculate the carrying value of the bonds payable on December 31, 2019. prior to their retirement Ο ΕΟΕ The carrying value of the bonds payable on December 31, 2019, prior to their retirement is $ 1,936.000 Requirement 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 Franklin Corporation will report an) $ as other income (loss) on the income statement : (0) Choose from any list or enter any number in the input fields and then click Check Answer hd All parts showing Clear All Check Answer tre to search

Answer 1

Franklin company will report $ 36000 as other income (loss) on the income statement.

Carrying Value of bonds payable     $ 1,936,000

Less: Purchase Amount of bonds.    $ 1,900,000

(20,000 bonds at $ 95 i.e. $ 95 * 20,000)

Gain or (Loss) on retirement bonds. $ 36,000