8. A bond issued with a par value of $200,000 and a carrying amount of $195,500 isretired at 98.5. The gain or loss on this transaction is:discont= 4500BondPayabl200000A) $3,000 loss.B) $3,000 gain.C) $1,500 loss.D) $1,500 gain.discoutDebit4500199901.5

The bonds are the financial instruments for the business used to raise the money from the market or…

8. A bond issued with a par value of $200,000 and a carrying amount of $195,500 is retired at 98.5. The gain or loss on this transaction is: dicont u Bond Payabl 200000 A) $3,000 loss. B) $3,000 gain. C) $1,500 loss. D) $1,500 gain. discout 4500 19991

8. A bond issued with a par value of $200,000 and a carrying amount of $195,500 is retired at 98.5. The gain or loss on this transaction is: dicont u Bond Payabl 200000 A) $3,000 loss. B) $3,000 gain. C) $1,500 loss. D) $1,500 gain. discout 4500 19991

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 18MC: OShea Inc. issued bonds at a face value of $100,000, a rate of 6%, and a 5-year term for $98,000....

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Concept explainers

Debenture Valuation

A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.

Note Valuation

It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:

Question

8. A bond issued with a par value of $200,000 and a carrying amount of $195,500 is
retired at 98.5. The gain or loss on this transaction is:
discont
= 4500
Bond
Payabl
200000
A) $3,000 loss.
B) $3,000 gain.
C) $1,500 loss.
D) $1,500 gain.
discout
Debit
4500
199901.5

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OShea Inc. issued bonds at a face value of $100,000, a rate of 6%, and a 5-year term for $98,000. From this information, we know that the market rate of interest was ________. A. more than 6% B. less than 6% C. equal to 6% D. cannot be determined from the information given.
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
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