On July 1, 2019, Montana Company has bonds with balances as shown below. Bonds Payable 66,000 Discount on Bonds Payable 3,800 I

Question

3 years ago

8

f the company retires the bonds for $71,150, what will be the effect on the income statement?

1 answer:

Otrada [13] · Answer 1 · 2022-08-06T23:51:31+03:00

Answer:

Loss on the retirement of $4,750

Explanation:

The following have the effect on the income statement which is a loss on the retirement and it amounts to $4,750

It is computed as:

Loss on retirement = Retirement value of the bonds - Issued price of the bonds

= $71,150 - $66,400

= $4,750

Working Note:

Issued Price of bonds = Face value - Discount on bonds payable

= $70,000 - $3,600

= $66,400

On July​ 1, 2019, Montana Company has bonds with balances as shown below. Bonds Payable 66,000 Discount on Bonds Payable 3,800 I