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Calculate the gain or loss on partial retirements of bonds

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Question - TWILIGHT corp. desired to raise cash to fund its expansion by its issuing long term bonds. On June 1 2018 twilight sold 500000 dollars in long term bonds. The bond will mature in 10 years and have a stated interest rate of 8%. The market rate was 10%the bonds pay interest semiannually on June 1 and December 1. The bonds are to be accounted for using the effective interest method. On June 2nd 2020 twilight decided to retire 20% of the bond at that time the bond were selling at 98.

Required -

a. Prepare all entries related to the bonds for 2018. Use the journal forms

b. Calculate the gain or loss on the partial retirements of bonds on June 2 2020 and prepared journal entries to record partial retirement.

Reference no: EM132534059

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