The balance sheet of Indian River Electronics Corporation as of
December 31, 2020, included 10.5% bonds having a face amount of
$91.0 million. The bonds had been issued in 2013 and had a
remaining discount of $4.0 million at December 31, 2020. On January
1, 2021, Indian River Electronics called the bonds before their
scheduled maturity at the call price of 102.
Required:
Prepare the journal entry by Indian River Electronics to record the
redemption of the bonds at January 1, 2021. (If no entry is
required for a transaction/event, select "No journal entry
required" in the first account field. Enter your answers in whole
dollars.)
Date | General Journal | Debit | Credit |
January 1, 2021 | Bonds payable | $91,000,000 | |
Loss on early extinguishment | $5,820,000 | ||
... Discount on bonds payable | $4,000,000 | ||
... Cash | $92,820,000 | ||
(To record the redemption of bonds) |
Cash = $91,000,000 * 102%
= $92,820,000
Loss on early extinguishment = $92,820,000 + $4,000,000 - $91,000,000
= $5,820,000
The balance sheet of Indian River Electronics Corporation as of December 31, 2020, included 10.5% bonds...
The balance sheet of Indian River Electronics Corporation as of December 31, 2020, included 10.5% bonds having a face amount of $91.0 million. The bonds had been issued in 2013 and had a remaining discount of $4.0 million at December 31, 2020. On January 1, 2021, Indian River Electronics called the bonds before their scheduled maturity at the call price of 102. Required: Prepare the journal entry by Indian River Electronics to record the redemption of the bonds at January...
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