On February 1, 2023, Pat Weaver Incorporated (PWI) issued 12%, $1,700, 000 bonds for $2,000,000. PWI retired all of these bonds on January 1, 2024, at 104. Unamortized bond premium on that date was $176,800. How much gain or loss should be recognized on this bond retirement? A. $108,800 loss B. $240,000 gain C. $108,800 gain D. $204,000 gain

On February 1, 2023, Pat Weaver Incorporated (PWI) issued 12%, $1,700, 000 bonds for $2,000,000. PWI retired all of these bonds on January 1, 2024, at 104. Unamortized bond premium on that date was $176,800. How much gain or loss should be recognized on this bond retirement? A. $108,800 loss B. $240,000 gain C. $108,800 gain D. $204,000 gain

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Starfish Corp. issued $200,000 bonds due in 5 years on January 1, 2020 for $210,000. On January 1, 2022, when the carrying value of the bond was $205,000, Starfish redeemed the bonds at 102. What amount of gain or loss should Starfish record related to the redemption? Loss 6000 Gain 1000 Gain 6000 O Loss 1000
NYK, Inc.retires a $45 million bond issue when the carrying value of the bonds is $47 million, but the market value of the bonds is $45 million. The entry to record the retirement will include: Select one: a. A credit of $4 million to Gain on Bond Retirement. b. A debit of $4 million to Loss on Bond Retirement. c. No gain or loss on retirement d. A debit of $2 million to Loss on Bond Retirement e. A credit of $2 million to Gain on Bond Retirement.
MSG Corporation issued $100,000 of 3-year, 6% bonds outstanding on December 31, 2020 for $106,000. The bonds pay interest annually and MSG uses straight-line amortization. On May 1, 2021, $10,000 of the bonds were retired at 112. As a result of the retirement, MSG will report: A. a $600 loss. B. a $667 loss. C. a $1,200 loss. D. a $1,200 gain.
NYK, Inc.retires a $45 million bond issue when the carrying value of the bonds is $43 million, but the market value of the bonds is $46 million. The entry to record the retirement will include: Select one: a. A debit of $3 million to Loss on Bond Retirement. b. A credit of $1 million to Gain on Bond Retirement. c. A debit of $1 million to Loss on Bond Retirement d. No gain or loss on retirement e. A credit of $2 million to Gain on Bond Retirement.
18. On January 1, 2020, Puckett Co. issued $50,000 of 8%, ten-year bonds at 98. Issuance costs amounted to $2,000. On July 1, 2025, one half of the bonds were called at 103. What was the loss on bond retirement, assuming the use of straight-line amortization? a. $1,425b. $ 975c. $2,425d. $2,250
Presented below are two independent situations: a) On December 31, 2021, Legault Corporation had $1,000,000, 8% bonds payable issued. The bonds pay interest on January 1 and June 1 of each year, and mature on January 1, 2021. On January 2, 2022, Legault redeemed 60% of these bonds at 101. The amortized cost of the entire bond issue on the retirement date was $1,026,000. The interest payment due on January 1, 2022, has been made and recorded. b) Antonio Inc. redeemed $500,000 of its bonds at 98 on December 31, 2021. The amortized cost of the bonds on the retirement date was $497,500. The bonds pay semi-annual interest and the interest payment due on December 31, 2021, has been made and recorded. Instructions For each of the independent situations, prepare the journal entry to record the retirement of the bonds
On January 1, 2014, New Country issued $200,000 of ten-year 8% bonds at 98. These bonds were callable at 102 at any time after three years. Straight-line amortization was used. On January 1, 2018, a new bond issue was sold and the old bonds were called. What was the loss on bond retirement? $8,000 $2,000 $6,400 $4,400
On June 30, 2020, Kikiam Inc. had outstanding 8%, P3,000,000 face amount, 15-year bonds maturing on June 30, 2027. Interest is payable on June 30 and December 31. The unamortized balances of bond discount as of June 30, 2020 is P105,000. Kikiam re-acquired all its bonds at 94 on June 30, 2020 and retired them. Ignoring income taxes, how much is the gain should Kikiam report on this early extinguishment of debt? A. 45,000 B. 75,000 C. 180,000 D. 105,000
QUESTION 2 Presented below are two independent situations: i) Horton Company redeemed $400,000 face value, 12% bonds at 96 on July 31, 2021. The carrying value of the bonds on the retirement date was $428,500. The bonds pay annual interest and the interest payment due on July 31, 2021, has been made and recorded. ii) Ball Corporation retired $380,000 face value, 10% bonds on September 30, 2021, at 101. The carrying value of the bonds on the retirement date was $371,500. The bonds pay annual interest and the interest payment due on September 30, 2021 has been made and recorded.
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On July 1, 2018, Miniature Company has bonds with balances as shown below. Bonds Payable 65,000 Discount Payable on Bonds 3,250 If the company retires the bonds for $66,150, what will be gain or loss on the retirement?