Extinguishment of Bonds Prior to Maturity

On December 1, 2014, Cone Company issued its 10%, $480,000 face value bonds for $560,000, plus accrued interest. Interest is payable on November 1 and May 1. On December 31, 2016, the book value of the bonds, inclusive of the unamortized premium, was $510,000. On July 1, 2017, Cone reacquired the bonds at 98 plus accrued interest. Cone appropriately uses 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. Enter all values as positive values.

Cone Company Computation of Gain on Extinguishment of Debt July 1, 2017 Book value of bonds on December 1, 2014 $________ Book value of bonds on December 31, 2016 _______ Amortization for 25 months $__________ Monthly amortization $___________ Book value of bonds on December 31, 2016 $_________ Amortization for 2017 to July 1, 2017 _________ Book value of bonds on July 1, 2017 $_________ Cost of reacquisition __________ Gain on bond redemption $_________