Assume that $1,000,000 bonds due in 5 years are issued on January 1, Year 1 at a discount for $926,395. There are $50,000 of bond issue costs being amortized over 5 years. Two years later, on January 1, Year 3, the entire issue is redeemed at 101 and cancelled. (Ignore income tax considerations).

(Note: this example uses the numbers from the table on page F5-46.)

Please show the steps or explain how to get the numbers.

Loss on Early Extinguishment of Bonds Assume that $1,000,000 bonds due in 5 years are issued on January 1, Year 1 at a discount for $926,395. There are $50,000 of bond issue costs being amortized over 5 years. Two years later, on January 1, Year 3, the entire issue is redeemed at 101 and cancelled. (Ignore income tax considerations). (Note: this example uses the numbers from the table on page F5-46.) Reacquisition price: (Face x % Paid) $1,000,000 x 101 $1,010,000 Bond Carrying Value: Face Less: Unamortized discount 1,000,000 950,826 Less: Unamortized bond issue cost Net Carrying Value Total Loss on Extinguishment 89,174 Components of the loss are: o Unamortized bond discount $49,174 o Unamortized bond issue cost 30,000 o Premium paid to retire ($1,000,000 x 1%) 10,000 TOTAL LOSS $89.174 Journal Entry: LI. 4 000 non