The balance sheet of Indian River Electronics Corporation as of December 31, 201

Question

The balance sheet of Indian River Electronics Corporation as of December 31, 2010, included 12.25% bonds having a face amount of $90 million. The bonds had been issued in 2003 and had a remaining discount of $3 million at December 31, 2010. On January 1, 2011, Indian River Electronics called the bonds before their scheduled maturity at the call price of 102.

Required:
Prepare the journal entry by Indian River Electronics to record the redemption of the bonds at January 1, 2011. (Enter your answers in dollars not in millions. Omit the "$" sign in your response.)

CR. DR.
Bonds Payable $90,000,000
Loss on early Extinguishment $?????
Cash ?????
Discount on Bonds Payable $3,000,000


I can't figure out the loss and cash amounts. If someone could help that'd be great!

Explanation / Answer

$90 million * 1.02 = $91,800,000 So credit cash should be $91,800,000 So the loss on early extinguishment should be $4,800,000 Debit Bonds Payable 90M Debit Loss on EE 4.8M Credit Cash 91.8M Credit Discount 3M

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