Exercise 14-12 On January 2, 2012, Waterway Corporation issued $1,100,000 of 10% bonds at 98 due December 31, 2021. Inte...
Exercise 14-12
On January 2, 2012, Waterway Corporation issued $1,100,000 of
10% bonds at 98 due December 31, 2021. Interest on the bonds is
payable annually each December 31. The discount on the bonds is
also being amortized on a straight-line basis over the 10 years.
(Straight-line is not materially different in effect from the
preferable “interest method”.)
The bonds are callable at 101 (i.e., at 101% of face amount), and
on January 2, 2017, Waterway called $660,000 face amount of the
bonds and redeemed them.
Ignoring income taxes, compute the amount of loss, if any, to be
recognized by Waterway as a result of retiring the $660,000 of
bonds in 2017. (Round answer to 0 decimal places, e.g.
38,548.)
| Loss on redemption | $
|
|
Prepare the journal entry to record the redemption.
(Round answers to 0 decimal places, e.g. 38,548. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts. Credit account titles are automatically
indented when amount is entered. Do not indent
manually.)
|
Date |
Account Titles and Explanation |
Debit |
Credit |
|
January 2, 2017 |
|
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Homework Answers
| Discount related to Bonds redeemed | 13200 | =660000*(1-0.98) | |
| Unamortized Discount related to Bonds redeemed | 6600 | =13200*5/10 | |
| 1 | |||
| Bonds redemption price | 666600 | =660000*1.01 | |
| Less: Carrying value of bonds redeemed | 653400 | =660000-6600 | |
| Loss on redemption | 13200 | ||
| 2 | |||
| Debit | Credit | ||
| Bonds payable | 660000 | ||
| Loss on redemption of Bonds | 13200 | ||
| Discount on Bonds payable | 6600 | ||
| Cash | 666600 | =660000*1.01 | |
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Exercise 14-12 On January 2, 2012, Waterway Corporation issued $1,100,000 of 10% bonds at 98 due December 31, 2021. Inte...
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(Straight-line is not materially different in effect from the
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Exercise 14-12
On January 2, 2015, Stellar Corporation issued $1,550,000 of 10%
bonds at 98 due December 31, 2024. Interest on the bonds is payable
annually each December 31. The discount on the bonds is also being
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(Straight-line is not materially different in effect from the
preferable “interest method.”)
The bonds are callable at 101 (i.e., at 101% of face amount), and
on January 2, 2020, Stellar called $930,000 face amount...
Exercise 14-12 On January 2, 2015, Sunland Corporation issued $1,850,000 of 10% bonds at 96 due...
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annually each December 31. The discount on the bonds is also being
amortized on a straight-line basis over the 10 years.
(Straight-line is not materially different in effect from the
preferable “interest method”.)
The bonds are callable at 102 (i.e., at 102% of face amount), and
on January 2, 2017, Concord called $1,350,000 face amount of the...
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bonds at 98 due December 31, 2024. Interest on the bonds is payable
annually each December 31. The discount on the bonds is also being
amortized on a straight-line basis over the 10 years.
(Straight-line is not materially different in effect from the
preferable “interest method.”)
The bonds are callable at 101 (i.e., at 101% of face amount), and
on January 2, 2020, Marin called $1,290,000 face amount of the...
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Exercise 14-12
On January 2, 2015, Stellar Corporation issued $1,550,000 of 10%
bonds at 98 due December 31, 2024. Interest on the bonds is payable
annually each December 31. The discount on the bonds is also being
amortized on a straight-line basis over the 10 years.
(Straight-line is not materially different in effect from the
preferable “interest method.”)
The bonds are callable at 101 (i.e., at 101% of face amount), and
on January 2, 2020, Stellar called $930,000 face amount...
On January 2, 2015, Cullumber Corporation issued $2,250,000 of 10% bonds at 98 due December 31, 2024. Interest on the bonds is payable annually each December 31. The discount on the bonds is also being amortized on a straight-line basis over the 10 years. Straight-line is not materially different in effect from the preferable "interest method.") The bonds are callable at 102 (i.e., at 102% of face amount), and on January 2, 2020, Cullumber called $1,350,000 face amount of the...
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