On January 2, 2015, Banno Corporation issued

$1,500,000 of 10% bonds at 97 due December 31, 2024. 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 diff erent in eff ect from the preferable interest method.)

The bonds are callable at 101 (i.e., at 101% of face amount), and on January 2, 2020, Banno called

$900,000 face amount of the bonds and redeemed them.

Instructions

Ignoring income taxes, compute the amount of loss, if any, to be recognized by Banno as a result of retiring

the $900,000 of bonds in 2020 and prepare the journal entry to record the redemption.

(AICPA adapted)

how to do it using financial calculator