Create the journal entry to record the redemption

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Reference no: EM131881669

Problem

On January 2, 2012, Pearl Corporation issued 51.200,000 of 10% bonds at 96 due December 31, 2021. 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 different in effect from the preferable 'interest method'.) The bonds are callable at 101 (i.e. at 101% of face amount), and on January 2, 2017, Pearl called 5720.000 face amount of the bonds and redeemed them.

Ignoring income taxes, compote the amount of loss, if any, to be recognized by Pearl as a result of retiring the $720.000 of bonds in 2017.
Prepare the journal entry to record the redemption.

Reference no: EM131881669

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