Reference no: EM131222704
On January 2, 2009, Banno Corporation issued $1,990,000 of 10% bonds at 98 due December 31, 2018. Legal and other costs of $25,300 were incurred in connection with the issue. Interest on the bonds is payable annually each December 31. The $25,300 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 “interest method”.)
The bonds are callable at 101 (i.e., at 101% of face amount), and on January 2, 2014, Banno called $1,194,000 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 $1,194,000 of bonds in 2014. (Round answer to 0 decimal places, e.g. 38,548.)
Determine:
A. Loss on redemption
B. Prepare the journal entry to record the redemption.
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