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    Retirement of Bonds for Marin Co.

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    The December 31, 2004 balance sheet of Marin Co. included the following items:
    7.5% bonds payable due December 31, 2012 $800,000
    Unamortized discount on bonds payable 32,000

    The bonds were issued on December 31, 2002 at 95, with interest payable on June 30 and December 31. (Use straight-line amortization.)

    On April 1, 2005, Marin retired $160,000 of these bonds at 101 plus accrued interest.

    Bond Interest Expense 3200
    Cash 3000
    (160,000 X 7.5 X 3/12)
    Discount on Bonds Pay 200
    (32,000 X 1/5 X 1/8 X 3/12)

    Bonds Payable 160,000
    Loss on Redemption of Bonds ?
    Discount on Bonds Payable 6200
    [(1/5 X 32,000) -200]
    Cash ?

    I am stuck on how to figure the loss/cash. Can someone explain it to me? Are the rest of the figures correct?

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    https://brainmass.com/business/bond-valuation/retirement-of-bonds-247401

    Solution Preview

    Interest Expense............................. 3,200
    Cash ($160,000 x 7.5% x 3/12).............. 3,000
    ...

    Solution Summary

    The retirement of bonds for Marin Co. are examined.

    $2.19

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