Question
On January 1, 2018, Shay issues $300,000 of 10%, 15-year bonds at a price of 97.75. Six years later, on January 1, 2024, Shay retires
On January 1, 2018, Shay issues $300,000 of 10%, 15-year bonds at a price of 97.75. Six years later, on January 1, 2024, Shay retires 20% of these bonds by buying them on the open market at 105.25. All interest is accounted for and paid through December 31, 2023, the day before the purchase. The straight-line method is used to amortize any bond discount. What is the carrying (book) value of the bonds and the carrying value of the 20% soon-to-be-retired bonds as of the close of business on December 31, 2023? How much did the company pay on January 1, 2024, to purchase the bonds that it retired? What is the amount of the recorded gain or loss from retiring the bonds? Prepare the journal entry to record the bond retirement at January 1, 2024.
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