E 14-15 Extinguishment of Bonds Prior to Maturity

On Dec. 1, 2014, Cone Company issued its 10%, $2million face value bonds for $2.3million, plus accrued interest. Interest is payable on November 1 and May 1. On Dec. 31, 2016, the book value of the bonds, inclusive of the unamortied premium, was $2.1million. On July 1, 2017, Cone reacquired the bonds at 98 plus accrued interest. Cone appropriately used the straight-line method for the amortization because the results do not materially differ from those of the effective interest method.

Required:

Prepare a schedule to compute the gain or loss on this redemption of debt. Show supporting computations in good form.