ZuoTi.Pro
Question

On 1/1/2020, SF had $1,000,000 of 12% bonds with a book value of $966,130. The bonds...

On 1/1/2020, SF had $1,000,000 of 12% bonds with a book value of $966,130. The bonds were issued previously at a price to yield 14% and interest payable semi-annually on June 30 and December 31. On 1/1/2020, SF retired the bonds by paying cash of $950,000. What amount of gain or loss should SF recognize on this early extinguishment of bonds? Also, prepare a journal entry related to the early extinguishment of bonds.

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Journal entry

date General Journal Debit Credit
1/1/20 Bonds payable 1000000
Gain on early extinguishment of bonds 16130
Discount on bonds payable (1000000-966130) 33870
Cash 950000
0 0
Add a comment
Know the answer?
Add Answer to:
On 1/1/2020, SF had $1,000,000 of 12% bonds with a book value of $966,130. The bonds...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

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

  • 30- On January 1, 2021, Tiny Tim Industries had outstanding $1,000,000 of 8% bonds with a...

    30- On January 1, 2021, Tiny Tim Industries had outstanding $1,000,000 of 8% bonds with a book value of $970,000. The indenture specified a call price of $986,500. The bonds were issued previously at a price to yield 10% and interest payable semi-annually on July 1 and January 1. Tiny Tim called the bonds (retired them) on July 1, 2021. What is the amount of the loss on early extinguishment? Multiple Choice $8,000. $0. $7,659. $8,500.

  • On 1/1/2020, SF issued bonds with $50,000 face value and 5% coupon rate. Effective interest rate...

    On 1/1/2020, SF issued bonds with $50,000 face value and 5% coupon rate. Effective interest rate is 4%. The bonds mature on 12/31/2023. Coupon will be paid semiannually on June 30 and December 31. What amount of interest payable should SF report in its 3/31/2020 balance sheet? Also, prepare a journal entry for the interest payable on 3/31/2020.

  • Tamarisk Inc. issued $900,000 of 10.25%, 19-year bonds on January 1, 2020, at 102. Interest is...

    Tamarisk Inc. issued $900,000 of 10.25%, 19-year bonds on January 1, 2020, at 102. Interest is payable semi-annually on July 1 and January 1. Tamarisk Inc. uses the effective interest method of amortization for any bond premium or discount. Assume an effective yield of 10.00%. (With a market rate of 10.00%, the issue price would be slightly higher. For simplicity, ignore this.) a) Prepare the journal entry to record the issuance of the bonds. (1/1/20) b) Prepare the journal entry...

  • 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...

  • On January 1, 2018, White, Inc. issues $1,000,000 total face value, 10-yr bonds with an annual...

    On January 1, 2018, White, Inc. issues $1,000,000 total face value, 10-yr bonds with an annual stated interest rate of 5%. Interest is paid semi-annually on June 30th and December 31st. The company received $559,260 upon issuance. (Solutions posted online) Period Cash Paid Interest Expense Amortization of Discount/Premium Unamortized Premium/Discount Bonds Carrying Value (Book Value) Issuance Don’t use Don’t use Don’t use 6/30/2018 12/31/2018 6/30/2019 Are the bonds issued at a premium, a discount, or at face value? What is...

  • Stilton Hotels Ltd. issued 10-year bonds on November 1, 2020, to finance the purchase of several...

    Stilton Hotels Ltd. issued 10-year bonds on November 1, 2020, to finance the purchase of several new hotels. The bonds pay interest semi-annually on April 30 and October 31 every year. Stilton Hotels decided to retire some of the bonds on June 1, 2022. Stilton Hotels follows IFRS Other information pertaining to the issuance of the bonds follows: Face value of bonds $ 1,152,000 Coupon rate Effective interest rate 10% Percentage of bond issue that was retired 19% Price at...

  • 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...

  • Metlock Inc. issued $730,000 of 10.40%, 19-year bonds on January 1, 2020, at 103. Interest is...

    Metlock Inc. issued $730,000 of 10.40%, 19-year bonds on January 1, 2020, at 103. Interest is payable semi-annually on July 1 and January 1. Metlock Inc. uses the effective interest method of amortization for any bond premium or discount. Assume an effective yield of 10.00%. (With a market rate of 10.00%, the issue price would be slightly higher. For simplicity, ignore this.) A. Prepare the journal entry to record the issuance of the bonds. B. Prepare the journal entry to...

  • Metlock Inc. issued $730,000 of 10.40%, 19-year bonds on January 1, 2020, at 103. Interest is...

    Metlock Inc. issued $730,000 of 10.40%, 19-year bonds on January 1, 2020, at 103. Interest is payable semi-annually on July 1 and January 1. Metlock Inc. uses the effective interest method of amortization for any bond premium or discount. Assume an effective yield of 10.00%. (With a market rate of 10.00%, the issue price would be slightly higher. For simplicity, ignore this.) A. Prepare the journal entry to record the issuance of the bonds. B. Prepare the journal entry to...

  • Bond Payable: On 7/1/14, Sasha issued $ 2,000,000 12% bonds, maturing in 5 years with a...

    Bond Payable: On 7/1/14, Sasha issued $ 2,000,000 12% bonds, maturing in 5 years with a yield of 10%, compounded semi-annually. The bonds pay interest semi-annually on June 30 and December 31 of each year. The bonds are to be accounted for under the effective interest method. Round to the nearest dollar. If possible can you do this in excel? At what amount were the bonds issued? __________ a. Prepare a well-labeled schedule (with debits/credits shown) for the journal entries...

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