Reference no: EM131247506
On January 2, 2009, Banno Corporation issued $1,400,000 of 10% bonds at 96 due December 31, 2018. Legal and other costs of $24,500 were incurred in connection with the issue. Interest on the bonds is payable annually each December 31. The $24,500 issue costs are being deferred and amortized on a straight-line basis over the 10-year term of the bonds. The discount on the bonds is also being amortized on a straight-line basis over the 10 years. (Straight-line is not materially different in effect from the preferable “interest method”.)
The bonds are callable at 102 (i.e., at 102% of face amount), and on January 2, 2014, Banno called $840,000 face amount of the bonds and redeemed them.
Ignoring income taxes, compute the amount of loss, if any, to be recognized by Banno as a result of retiring the $840,000 of bonds in 2014. (Round answer to 0 decimal places, e.g. 38,548.)
Required:
(a) Loss on redemption
(b) Prepare the journal entry to record the redemption. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.
January 2, 2014
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Account Titles and Explanatipions
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Debit
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Credit
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