Prepare the journal entry to record the redemption


Question:

On January 2, 2009, Banno Corporation issued $2,100,000 of 10% bonds at 98 due December 31, 2018. Legal and other costs of $24,100 were incurred in connection with the issue. Interest on the bonds is payable annually each December 31. The $24,100 issue costs are being deferred and amortized on a straight-line basis over the 10-year term of the bonds. 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 Ac€A?interest method.

The bonds are callable at 102 (i.e., at 102% of face amount), and on January 2, 2014, Banno called $1,260,000 face amount of the bonds and redeemed them.

Ignoring income taxes, compute the amount of loss, if any, to be recognized by Banno as a result of retiring the $1,260,000 of bonds in 2014.

Loss on redemption $

Prepare the journal entry to record the redemption

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Accounting Basics: Prepare the journal entry to record the redemption
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