(Entries for Retirement and Issuance of Bonds) Friedman Company had bonds outstanding with a maturity value of...

Question:

(Entries for Retirement and Issuance of Bonds) Friedman Company had bonds outstanding with a maturity value of $500,000. On April 30, 2011, when these bonds had an unamortized discount of $10,000, they were called in at 104. To pay for these bonds, Friedman had issued other bonds a month earlier bearing a lower interest rate. The newly issued bonds had a life of 10 years. The new bonds were issued at 103 (face value $500,000). Issue costs related to the new bonds were $3,000. Ignoring interest, compute the gain or loss and record this refunding transaction.

(AICPA adapted)

Bonds
When companies need to raise money, issuing bonds is one way to do it. A bond functions as a loan between an investor and a corporation. The investor agrees to give the corporation a specific amount of money for a specific period of time in exchange... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...