On January 1, 2020, the Rangler Company issued $600,000 of eight-year bonds at 102. The stated annual interest rate is 8%, and interest is paid on June 30 and December 31. The bonds are callable at 105 plus accrued interest. The bond issue costs were $7,200. The Rangler Company uses the straight-line method to amortize bond discounts and premiums. Required: a. Prepare the journal entry(ies) to record the issuance of the bonds and the bond issue costs. b. At the end of the sixth year, the company exercised the call option and retired the bonds. Prepare the journal entries to record the related interest and retirement.

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.