Exercise 10-14 Tha situations presented hara are independent of each other. of t
ID: 2521523 • Letter: E
Question
Exercise 10-14 Tha situations presented hara are independent of each other. of the bonds. Flur der Corp. edeemed 252,000 face value, 10% bonds on April 30, 2017 at 105. The carry ng value o te bon ds at the redemption date was 137 343. The bonds pa y annual interest, and t he interest payment due on April 30 2017 has been made and eco ded (Cred it account titles re utomatically indented when ?/nount is entered. Do ?0t indent manually.) Da Acoint Titles and Fxplanation Apr. 30 Debit Credit Shamrock tic redeemed 178,000 ace value, 12.5% bunds on June 20, 2017 at g9. The cattying value ofthu bonds a he redemption da e was $192. 59. The bunds pay annual iteres , and account titles are automalically indented wher aunount is entered. Do mol indent manualy.) the interest paymert due utnJune 20, 2017 has been made and r ecorded. (Credit Date Nocount Titles and Explanation Debit Credit un, 30Explanation / Answer
1) April 30 2017:
Calculating Discount:
Carrying value = $137,343
Face Value = $152,000
Discount = $137,343 - $152,000 = $14,657
Calculating Gain / Loss:
Carrying value = $137,343
Redemption Price = $152,000 * 105% = $159,600
Loss = $137,343 - $159,600 = $22,257
Jouranl entry:
Dr Bonds Payable 152,000
Dr Loss on Bond Redemption 22,257
Cr Discount on Bonds Payable 14,657
Cr Cash 159,600
(Recording retirement of bond at loss)
2) June 30 2017:
Calculating Premium:
Carrying value = $192,659
Face Value = $178,000
Premium = $192,659 - $178,000 = $14,659
Calculating Gain / Loss:
Carrying value = $192,659
Redemption Price = $178,000 * 99% = $176,220
Gain = $192,659- $176,220 = $16,439
Jouranl entry:
Dr Bonds Payable 178,000
Dr Premium on Bond Redemption 14,659
Cr Gain on Redemption 16,439
Cr Cash 176,220
(Recording retirement of bond at gain)
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