29 Jun Question 86. Beonce Company received
Question
86. Beonce Company received proceeds of $188,500 on 10-year, 8% bonds issued on January 1, 2011. The bonds had a face value of $200,000, pay interest semi-annually on June 30 and December 31, and have a call price of 101. Beonce uses the straight-line method of amortization.
Beonce Company decided to redeem the bonds on January 1, 2013. What amount of gain or loss would Beonce report on its 2013 income statement?
a. $9,200 gain
b. $11,200 gain
c. $11,200 loss
d. $9,200 loss
87. Bargain Company has $1,600,000 of bonds outstanding. The unamortized premium is $21,600. If the company redeemed the bonds at 101, what would be the gain or loss on the redemption?
a. $5,600 gain
b. $5,600 loss
c. $16,000 gain
d. $16,000 loss
88. The current carrying value of Kane’s $900,000 face value bonds is $897,000. If the bonds are retired at 103, what would be the amount Kane would pay its bondholders?
a. $897,000
b. $900,000
c. $906,000
d. $927,000
89. Lark Corporation retires its $800,000 face value bonds at 105 on January 1, following the payment of annual interest. The carrying value of the bonds at the redemption date is $829,960. The entry to record the redemption will include a
a. credit of $10,040 to Loss on Bond Redemption.
b. debit of $10,040 to Loss on Bond Redemption.
c. credit of $10,040 to Premium on Bonds Payable.
d. debit of $40,000 to Premium on Bonds Payable.
90. A $600,000 bond was retired at 103 when the carrying value of the bond was $622,000. The entry to record the retirement would include a
a. gain on bond redemption of $18,000.
b. loss on bond redemption of $12,000.
c. loss on bond redemption of $18,000.
d. gain on bond redemption of $4,000.
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