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Question: extinguishment of bonds prior to maturity on december 1 2014...

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Extinguishment of Bonds Prior to Maturity

On December 1, 2014, Cone Company issued its 8%, $530,000 face value bonds for $610,000, plus accrued interest. Interest is payable on November 1 and May 1. On December 31, 2016, the book value of the bonds, inclusive of the unamortized premium, was $560,000. On July 1, 2017, Cone reacquired the bonds at 99 plus accrued interest. Cone appropriately uses the straight-line method for the amortization because the results do not materially differ from those of the effective interest method.

Required:

Prepare a schedule to compute the gain or loss on this redemption of debt. Enter all values as positive values.

Cone Company
Computation of Gain on Extinguishment of Debt
July 1, 2017
Book value of bonds on December 1, 2014 $
Book value of bonds on December 31, 2016
Amortization for 25 months $
Monthly amortization $
Book value of bonds on December 31, 2016 $
Amortization for 2017 to July 1, 2017
Book value of bonds on July 1, 2017 $
Cost of reacquisition
Gain on bond redemption $
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