6. 18. Sandra Corporation issued a $100,000, 10-year, 10 percent bond on December 1, 2013, for $112,000. The companyreacquired the bonds for retirement recently when the bonds were selling at 102 on the open market, and the bonds hadunamortized premium of $5,900. How much gain or loss should the company recognize on the retirement of the bonds?A) $2,000 lossB) $3,900 gainC) $6,100 gain.D) $8,200 loss19. On January 1, 2021, Abhishek Company purchased machinery for $25,000 and agreed to finance the purchase by making15 equal payments each December 31 at the implicit interest rate of 9%. Determine the balance in the Note Payable afterthe first payment.A) $22,750B) $21,899C) $24,149D) $24,413On October 1 2021 Emma Company issued 800 of its 7 percent 7 year $1.000 bonds at an issue price of $993 530 The20

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18. Sandra Corporation issued a $100,000, 10-year, 10 percent bond on December 1, 2013, for $112,000. The company reacquired the bonds for retirement recently when the bonds were selling at 102 on the open market, and the bonds had unamortized premium of $5.900. How much gain or loss should the company recognize on the retirement of the bonds? A) $2,000 loss 10 B) $3,900 gain C) $6,100 gain D) $8,200 loss Onl 10001 thhinh-ke- 625.000

18. Sandra Corporation issued a $100,000, 10-year, 10 percent bond on December 1, 2013, for $112,000. The company reacquired the bonds for retirement recently when the bonds were selling at 102 on the open market, and the bonds had unamortized premium of $5.900. How much gain or loss should the company recognize on the retirement of the bonds? A) $2,000 loss 10 B) $3,900 gain C) $6,100 gain D) $8,200 loss Onl 10001 thhinh-ke- 625.000

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 5E

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Similar questions

Chung Inc. issued $50,000 of 3-year bonds on January 1, 2018, with a stated rate of 4% and a market rate of 4%. The bonds paid interest semi-annually on June 30 and Dec. 31. How much money did the company receive when the bonds were issued? The bonds would be quoted at what rate?
Naval Inc. issued $200,000 face value bonds at a discount and received $190,000. At the end of 2018, the balance in the Discount on Bonds Payable account is $5,000. This years balance sheet will show a net liability of ________. A. $200,000 B. $180,000 C. $195,000 D. $205,000
Eli Inc. issued $100,000 of 8% annual, 5-year bonds for $103,000. What is the total amount of interest expense over the life of the bonds?
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Bats Corporation issued 800,000 of 12% face value bonds for 851,705.70. The bonds were dated and issued on April 1, 2019, are due March 31, 2023, and pay interest semiannually on September 30 and March 31. Bats sold the bonds to yield 10%. Required: 1. Prepare a bond interest expense and premium amortization schedule using the straight-line method. 2. Prepare a bond interest expense and premium amortization schedule using the effective interest method. 3. Prepare any adjusting entries for the end of the fiscal year, December 31, 2019, using the: a. straight-line method of amortization b. effective interest method of amortization 4. Assume the company retires the bonds on June 30, 2020, at 103 plus accrued interest. Prepare the journal entries to record the bond retirement using the: a. straight-line method of amortization b. effective interest method of amortization
On January 1, 2019, Brewster Company issued 2,000 of its 5-year, 1,000 face value, 11% bonds dated January 1 at an effective annual interest rate (yield) of 9%. Brewster uses the effective interest method of amortization. On December 31, 2023, Brewster extinguished the 2,000 bonds early through acquisition in the open market for 1,980,000. On July 1, 2022, Brewster issued 5,000 of its 6-year, 1,000 face value, 10% convertible bonds dated July 1 at an effective annual interest rate (yield) of 12%. The bonds are convertible at the option of the investor into Brewsters common stock at a ratio of 10 shares of common stock for each bond. Brewster uses the effective interest method of amortization. On July 1, 2023, an investor in Brewsters convertible bonds tendered 1,500 bonds for conversion into 15,000 shares of Brewsters common stock, which had a market value of 105 per share at the date of the conversion. Required: 1. Using the information about Brewster, answer the following questions: a. Were the 11% bonds issued at par, at a discount, or at a premium? Why? b. Is the amount of interest expense for the 11% bonds using the effective interest method of amortization higher in the first or second year of the life of the bond issue? Why? 2. Using the information about Brewster, explain the following: a. How is a gain or loss on early extinguishment of debt determined? Does the early extinguishment of the 11% bonds result in a gain or loss? Why? b. How does Brewster report the early extinguishment of the 11% bonds on the 2023 income statement? 3. Based on the information provided about Brewster, answer the following questions: a. Does recording the conversion of the 10% convertible bonds into common stock under the book value method affect net income? What is the rationale for the book value method? b. Does recording the conversion of the 10% convertible bonds into common stock under the market value method affect net income? What is the rationale for the market value method?
On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated interest rate of 12% payable semi-annually on July 1 and January 1. The bonds were sold to yield 10%. Assuming the bonds were sold at 107.732, what is the selling price of the bonds? Were they issued at a discount or a premium?