BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

Solutions

Chapter
Section
BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
18 views

On July 1, 2019, Rix Corporation had $10,000,000 of 9% bonds outstanding. The maturity date is June 30, 2024. Interest is paid semiannually every June 30 and December 31. All the bonds were redeemed on July 1, 2019, at 98. At the time of the bond redemption, there was unamortized bond premium of $60,000 and unamortized debt issuance costs of $100,000.

What is the amount of the gain on the bond redemption?

  1. a. $80,000 gain
  2. b. $160,000 gain
  3. c. $240,000 gain
  4. d. $0

To determine

Calculate the amount of the gain on the bond redemption.

Explanation

Retirement of Bonds:

The process of repaying the sale amount of bonds to bondholders at the time of maturity or before the maturity period is called as redemption of bonds. It is otherwise called as redemption of bonds.

Justification for the incorrect options of a, c and d:

$80,000gain, $240,000 gain and $0 are not recognized as the gain on the bond redemption. Therefore, these are incorrect options.

Justification for the correct option b:

Calculate the gain on redemption:

Gainonredemption=

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Why is the journal called a book of original entry?

College Accounting (Book Only): A Career Approach

Describe the transactions recorded in the following T accounts:

College Accounting (Book Only): A Career Approach

REPLACEMENT ANALYSIS The Erley Equipment Company purchased a machine 5 years ago at a cost of 90,000. The machi...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)