Reference no: EM13127915
On January 2, 2007, Prebish Corporation issued $1,500,000 of 10% bonds at 97 due December 31, 2016. Legal and other costs of $24,000 were incurred in connection with the issue. Interest on the bonds is payable annually each December 31. The $24,000 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 101 (i.e., at 101% of face amount), and on January 2, 2012, Prebish called $1,000,000 face amount of the bonds and retired them.
Ignoring income taxes, compute the amount of loss, if any, to be recognized by Prebish as a result of retiring the $1,000,000 of bonds in 2012. (Round answers to 0 decimal places, e.g. $38,548.)
Loss on redemption $
Prepare the journal entry to record the retirement. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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