Required information

Exercise 10-9 Straight-Line: Bond computations, amortization, and bond retirement LO P2, P4

On January 1, 2017, Shay issues $380,000 of 9%, 15-year bonds at a price of 97.25. Six years later, on January 1, 2023, Shay retires 30% of these bonds by buying them on the open market at 105.25. All interest is accounted for and paid through December 31, 2022, the day before the purchase. The straight-line method is used to amortize any bond discount.

1. How much does the company receive when it issues the bonds on January 1, 2017?

Cash proceeds from sale of bonds at issuance

2. What is the amount of the discount on the bonds at January 1, 2017? Amount of discount _____

3. How much amortization of the discount is recorded on the bonds for the entire period from January 1, 2017, through December 31, 2022?

Authorization of discount _____

5. How much did the company pay on January 1, 2023, to purchase the bonds that it retired?

Purchase Price ___

6. What is the amount of the recorded gain or loss from retiring the bonds?

Gain or Loss of Retirement? Amount _______

7. Prepare the journal entry to record the bond retirement at January 1, 2023.

4. What is the carrying (book) value of the bonds and the carrying value of the 30% soon-to-be-retired bonds as of the close of business on December 31, 2022? Entire Retired Group 30% Par value Remaining discount Carrying value Required information Journal entry worksheet 1 Record the retirement of 30% of the bonds before maturity January 1, on 2023. Note: Enter debits before credits. Date General Journal Debit Credit Jan 01, 2023 Clear entry Record entry View general journal