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The December 31, 2016, balance sheet of ABC, LLP included 12% bonds with a face amount of $100 million. The bonds were issued in 2006 and had a remaining discount of $3,400,000 at December 31, 2016. On January 1, 2017, ABC called the bonds at a price of 102.

Prepare the journal entry by ABC to record the retirement of the bonds on January 1, 2017.

What is the difference between loss on early extinguishment of debt and loss on retirement of bonds? or do they mean the same thing/similar journal entry account name?

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Keith Leannon
Keith LeannonLv2
6 Jan 2018

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The December 31, 2012, balance sheet of Ming Inc. included 12%bonds with a face amount of $100 million. The bonds were issued in2002and had a remaining discount of $3,400,000 at December 31,2012. On January 1, 2013, Ming called the bonds at a price of102.


Required:


Prepare the journal entry by Ming to record the retirement ofthe bonds on January 1, 2013.


III. Bonds Payable issue and amortization

Carson Company issued $1,000,000 of corporate bonds on January 1, 2016. The bonds have a stated rate of 4 percent, and a 10 year life. The bonds were issued to yield 3 percent. The bonds pay interest annually, each December 31, starting December 31, 2016.

A. Calculate the issue price of the bonds at 1/1/16. Show your assumptions for your calculations.

B. Prepare an amortization schedule for the bonds through December 31, 2017.

C. Prepare the following journal entries:

1. Issue of the bonds on January 1, 2016.

2. Payment of interest (and related amortization) on December 31, 2016.

3. Early retirement of the bonds on December 31, 2017, for 101 (101 percent of face value) after the second interest payment.

IV. Refer back to the information in Part III. Assume that Carson’s year end financial statement date is March 31, 2016.

A. Prepare the adjusting journal entry at March 31, 2016, to record the accrual of interest and related amortization.

B. Prepare the journal entry to pay the first interest payment on December 31, assuming reversing journal entries were posted at the beginning of the new year (April 1, 2016).

C. Prepare the journal entry to pay the first interest payment on December 31, assuming NO reversing journal entries were posted at the beginning of the new year (April 1, 2016).

On January 1, 2016, Mania Enterprises issued 10% bonds dated January 1, 2016, with a face amount of $19.4 million. The bonds mature in 2025 (10 years). For bonds of similar risk and maturity, the market yield is 8%. Interest is paid semiannually on June 30 and December 31.

A. Determine the price of the bonds at January 1, 2016.

B. Prepare the journal entry to record the bond issuance by Mania on January 1, 2016.

C. Prepare the journal entry to record interest on June 30, 2016, using the effective interest method

D. Prepare the journal entry to record interest on December 31, 2016, using the effective interest method.

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