Exercise 14-12

On January 2, 2012, Metlock Corporation issued $1,100,000 of 10% bonds at 98 due December 31, 2021. Interest on the bonds is payable annually each December 31. The discount on the bonds is also being amortized on a straight-line basis over the 10 years. (Straight-line is not materially different in effect from the preferable interest method.) The bonds are callable at 101 (i.e., at 101% of face amount), and on January 2, 2017, Metlock called $660,000 face amount of the bonds and redeemed them. Ignoring income taxes, compute the amount of loss, if any, to be recognized by Metlock as a result of retiring the $660,000 of bonds in 2017. (Round answer to 0 decimal places, e.g. 38,548.)

Loss on redemption

$

Prepare the journal entry to record the redemption. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
January 2, 2017