A company retired $68 million of its 5% bonds at 105 ($71.4 million) before their scheduled maturity. At the time, the bonds had a remaining discount of $1 million. Prepare the journal entry to record the redemption of the bonds.

A company retired $68 million of its 5% bonds at 105 ($71.4 million) before their scheduled maturity. At the time, the bonds had a remaining discount of $1 million. Prepare the journal entry to record the redemption of the bonds.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 10EA: Pinetop Corporation issued $150,000 10-year bonds at par. The bonds have a stated rate of 6% and pay...

See similar textbooks

Related questions

Q: On June 30, Jamison Company issued $2,500,000 of 10-year, 8% bonds, dated June 30, for $2,580,000.…

A: Payment of interest on December 31 = Face value of bonds x rate of interest x no. of months /12…

Q: On December 1, Y4, Boston Corp. issued $4,600,000 (par value), 12%, 5-year convertible bonds for…

Q: 14. On the first day of 2021, TrueTech Companies had outstanding $1,000,000 of 10% bonds with a book…

A: Outstanding $1,000,000 of 10% bonds with a book value of $971,000 Truetech called the bonds on July…

Q: On January 1, 2021, Tiny Tim Industries had outstanding $1,000,000 of 8% bonds with a book value of…

A: A bond is the long-term debt of an entity. The bonds are paid in more than one year. The bonds…

Q: Medhurst Corporation issued $86,100 in bonds for $83,000. The bonds had a stated rate of 8% and pay…

A: Formula used for calculating discount on bonds payable: Discount on bonds payable = issued price -…

Q: Jaurez Company issued $400,000 of 9%, 10-year bonds on January 1, 2010, at face value. Interest is…

A: Journal entry is a process of recording the business transaction in the books of accounts for the…

Q: On January 1 of this year, the carrying value of XYZ Inc's bonds was $750,590. The face value of…

A: Carrying value of bonds = $ 750590 Face value of bonds = $ 760000 Gain or loss on redemption of…

Q: The Kaplan Group sold $200,000 of 10-year bonds for $190,000. The face rate on the bonds was 8% and…

A: Interest paid on December 31 = Face value of bonds x rate of interest x no. of years = $200000 x 8%…

Q: Several years ago, Cyclop Company issued bonds with a face value of $1,000,000 for $1,045,000. As a…

A: Bond Retirement Bond retirement means the repayment of the value of the bond to its bond holder.…

Q: On April 1 2017 , Seminole Company sold 15,000 of it 11%, 15-year, $1000 face value bonds at 97.…

A: Journal entries are recording of the transaction in the accounting journal in a chronological order.…

Q: On the first day of 2021, Rooney Inc had outstanding $1,000,000 of 9% bonds with a book value of…

A: Explanation: We should compare the amount we pay for the bonds and the book value of the bonds:…

Q: Ignoring interest, compute the gain or loss. Loss on redemption $ Ignoring interest, record…

A: Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing…

Q: Premium Pizza retires its 7% bonds for $72,000 before their scheduled maturity. At the time, the…

A: Early retirement of bonds: it is the process of repaying the principal amount of bonds to…

Q: On January 1, 2018, Davie Services issued $20,000 of 8% bonds that mature in five years. They were…

A: Premium on issue of bonds = Isue value - face value of bonds = $20,750 - $20,000 = $750

Q: On April 1, 2017, Seminole Company sold 15,000 of its 11%, 15-year, $1,000 face value bonds at 97.…

A: “Hey, since there are multiple questions posted, we will answer first three questions If you want…

Q: On April 30, one year before maturity, Middleton company retired $200,000 of its 9% bonds payable at…

A: The retirement amount on bond is $202,000. The book value of bond is $196,000.

Q: A company retired $60 million of its 6% bonds at 102 ($61.2 million) before their scheduled…

Q: On January 1, 2011, Fox Corp. issued 1,000 of its 10%, $1,000 bonds for $1,040,000. These bonds were…

A: Calculate the book value of bonds at the time of extinguishment.

Q: Crazy Corporation issued $300,000 of 10%, 20-year bonds at 106 on January 1, 2012. Interest is…

A: The bond issue premium represents the excess of bonds proceeds on issue over the face value of the…

Q: Jen Corporation retires its P 500,000 face value bonds at 105 on January 1, following the payment of…

A: Bonds when redeemed at more than the carrying value of the bonds they record loss .

Q: much should be recorded for Discount (or Premium) on Bonds Payable? (Enter an amount. Please do not…

A: Journal: Journal is considered as a book of original entry because all the transactions that have…

Q: Godwin corporation retired its bonds at 105 on january 1 after the payment of interest. The face…

A: Bond retirement refers to the cancellation or repurchase of bonds that were earlier issued. The…

Q: The face value of Ace Hardware Company's outstanding bonds is $400,000 and unamortized premium is…

A: Solution: Unamortized premium pertains tp retirement of bonds = Total Unamortized premium x 50% =…

Q: On January 1, 2017, Henderson Corporation redeemed $500,000 of bonds at 99. At the time of…

A: Calculate the amount of cash paid to redeem the bond.

Q: Josselle Corporation retires its bonds at 106 on January 1, after the payment of interest.The face…

A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…

Q: Discount Pizza retires its 7% bonds for $68,000 before their scheduled maturity. At the time, the…

A: Given information is: Discount Pizza retires its 7% bonds for $68,000 before their scheduled…

Q: The December 31, 2017, balance sheet of Ming Inc. included 12% bonds with a face amount of $107…

A: Solution: Journal entry is as under: Particulars Debit Credit Bond payable 107000000 Loss…

Q: On February 1, 2009, Alpha Company issued 5,000 of its P1,000 face value bonds at 110 plus accrued…

A: Formula: Net amount received from the issuance of the bonds = Issue value of the bonds + Accrued…

Q: On January 1, 2002, Brownies Corp. issued 1,000 of its 10%, P1,000 bonds for P1,040,000. These bonds…

A: Solution:- Given, Brownies Corp. issued 1000 of its 10%, P1,000 bonds for P1,040,000 Bonds were to…

Q: On December 31 Wintergreen, Inc., issued $150,000 of 7 percent, 10-year bonds at a price of 93.25.

A: Bond is issued on discount when the bond is issued less than the market price of bond. Discount…

Q: The company has outstanding bonds payable with a total face value of $100,000. On July 1, the…

A: Introduction: Journals: Recording of a business transactions in a chronological order. First step…

Q: On May 1, 2020, Judice Company issued 400 $1,000 bonds at 104. Each bond was issued with two…

A: Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various…

Q: 63,) A company issued a P3,000,000, 6-year bonds dated January 1, 2021, with a stated interest rate…

A: First question: PhP 107,798.74 Second question: PhP309,984

Q: The 10% bonds payable of Nixon Company had a net carrying amount of $760,000 on December 31, 2012.…

A: Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various…

Q: On January 1, 2021, Tiny Tim Industries had outstanding $1,000,000 of 9% bonds with a book value of…

A: Compare the amount paid for the bonds and book value then we get the loss To calculate book value,…

Q: A company previously issued $2,000,000, 10% bonds, receiving a $120,000 premium. On the current…

A: During retirement of a bond, if its book value is more than the cash paid to the bond holders it…

Q: Lahey Corporation retires its $800,000 face value bonds at 105 on January 1, following the payment…

A: 1. Redemption of Bonds - In the current case, the company holds bonds with a face value of $100 of…

Q: The long-term liability section of Eastern Post Corporation’s balance sheet as of December 31, 2015,…

A: Bond is an instrument which represent the amount of loan raised by the borrower from the lender. It…

Q: On April 30, one year before maturity, Middleton Company retired $200,000 of its 9% bonds payable at…

A: Introduction: The issuer acknowledges a loss on retirement if the price paid to retire a bond…

Q: On January 1, 2015, Glover Corporation issued $2,400,000 of 5-year, 8% bonds at 95. The bonds pay…

A: a). Face value of bond = $2,400,000 (24,000 bonds) = $120,000…

Q: On July 1, 2018, bondholders converted bonds of Vebbz Corporation with a face value of $90,000 into…

A: The correct option is c i.e., Common Stock -] CR $81,000; Contributed Surplus - Conversion - CR…

Q: 3. On April 30, one year before maturity, Romo Company retired $300,000 of its 8% bonds payable at…

A: If there is a question that has more than 1 question and questions other than the first hassubparts,…

Q: Wildhorse Corporation issued $410,000 of 10-year bonds at a discount. Prior to maturity, when the…

A: Solution: Face value of bond= $410,000 Carrying value of bond prior to redemption = $379,250…

Q: On January 1, 2020, Naples Co. issued $280,000 of 10-year bonds at 96. The bonds pay 6% cash…

A: Total discount on bonds retired on June 1, 2020 = Total amount of bonds issued x % of bonds retired…

Q: On January 1, 2020, Henderson Corporation redeemed $500,000 of bonds at 99. At the time of…

A: Calculate the amount of cash paid to redeem the bond.

Question

A company retired $68 million of its 5% bonds at 105 ($71.4 million) before their scheduled maturity. At the time, the bonds had a remaining discount of $1 million.

Prepare the journal entry to record the redemption of the bonds.

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267
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?
A company issued $100,000, 5-year bonds, receiving $97,000. What is the balance sheet presentation immediately after the sale?
On September 30, Franz Corporation notices a decline in value of its investment in held-to-maturity bonds. On that date, the carrying value of the bonds is 38,500 and the fair value is 22,980. Franz evaluation of this investment reveals that expected credit losses are 10,000. Prepare the journal entry to record the impairment.
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?
Diana Inc. issued $100,000 of its 9%, 5-year bonds for $96,149 when the market rate was 10%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments.
On July 1, Somerset Inc. issued $200,000 of 10%, 10-year bonds when the market rate was 12%. The bonds paid interest semi-annually. Assuming the bonds sold at 58.55, what was the selling price of the bonds? Explain why the cash received from selling this bond is different from the $200,000 face value of the bond.
Starmount Inc. sold bonds with a $50,000 face value, 12% interest, and 10-year term at $48,000. What is the total amount of interest expense over the life of the bonds?
On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds with a face value of $1,000 for $104,000. The bonds had a stated rate of 6% and paid interest semiannually. What is the journal entry to record the issuance of the bonds?
Medhurst Corporation issued $90,000 in bonds for $87,000. The bonds had a stated rate of 8% and pay interest quarterly. What is the journal entry to record the sale of the bonds?
Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1, 2018, and received $540,000. Interest is payable semi-annually. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. A. July 1, 2018: entry to record issuing the bonds B. Dec. 31, 2018: entry to record payment of interest to bondholders C. Dec. 31, 2018: entry to record amortization of premium