Tamarisk Co. is building a new hockey arena at a cost of $2,630,000. It received a downpayment of $520,000 from local businesses to support the project, and now needs to borrow $2,110,000 to complete the project. It therefore decides to issue $2,110,000 of 12%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 11%. Assume that on July 1, 2022, Tamarisk Co. redeems half of the bonds at a cost of $1,122,300 plus accrued interest. Prepare thejournal entry to record this redemption. (Round answers to 0 decimal places, eg. 38,548. If no entry is required, select "No Entry" forthe account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indentmanually.)Date Account Titles and ExplanationDebitCreditJuly1,2022(To record interest)July1,2022

Present value of principal = $2110000*0.35218= $743100 (PV @11% for 10 year= 0.35218) Present value…

Answered: s redemption O for the amoL

Business

Accounting

s redemption O for the amoL

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 9RE

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Concept explainers

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.

Question

Tamarisk Co. is building a new hockey arena at a cost of $2,630,000. It received a downpayment of $520,000 from local businesses to support the project, and now needs to borrow $2,110,000 to complete the project. It therefore decides to issue $2,110,000 of 12%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 11%.

Assume that on July 1, 2022, Tamarisk Co. redeems half of the bonds at a cost of $1,122,300 plus accrued interest. Prepare the
journal entry to record this redemption. (Round answers to 0 decimal places, eg. 38,548. If no entry is required, select "No Entry" for
the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent
manually.)
Date Account Titles and Explanation
Debit
Credit
July
1,
2022
(To record interest)
July
1,
2022

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