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kirill [66]
2 years ago
5

On February 1, 2020, Pat Weaver Inc. (PWI) issued 7%, $1,200,000 bonds for $1,500,000. PWI retired all of these bonds on January

1, 2021, at 106. Unamortized bond premium on that date was $127,200. How much gain or loss should be recognized on this bond retirement
Business
1 answer:
OLEGan [10]2 years ago
5 0

Answer:

$55,200 gain

Explanation:

Calculation to determine How much gain or loss should be recognized on this bond retirement

First step is to determine the Book value on date of sale

Book value on date of sale=$1,200,000+$127,200

Book value on date of sale=$1,327,200

Second step is to calculate the Retired value of bonds

Retired value of bonds =$1,200,000*106

Retired value of bonds=$1,272,000

Now let determine the Gain on bonds retirement

Using this formula

Gain on bond retirement=Book value on date of sale-Retired value of bonds

Let plug in the formula

Gain on bond retirement=$1,327,200-$1,272,000

Gain on bond retirement=$55,200 gain

Therefore the amount of gain that should be recognized on this bond retirement will be $55,200 gain

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At the beginning of 2017, Miyazaki Company's Accounts Receivable balance was $105,000, and the balance in Allowance for Doubtful
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Unpaid balance for the year       $229,500      $229,500

Allowance for doubtful accounts    (18,900)          (14,820)

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a) Data and Calculations:

Beginning balances:

Accounts receivable = $105,000

Allowance for Doubtful Accounts = $1,950

Sales in 2017 = $787,500

Credit Sales = $630,000 (80% of $787,500)

Total collections on account = $502,500

Uncollectibles written off =   $3,000

Unpaid balance for the year = $229,500 ($105,000 + $124,500)

Bad Debts Expense = $18,900 ($630,000 * 3%)

Allowance for Uncollectibles = $13,770 ($229,500 * 6%)

a) Allowance for Doubtful Accounts:

Account Titles               Debit        Credit

Beginning balance                        $1,950

Accounts receivable  $3,000

Bad Debts Expense                      18,900

Balance                       17,850

b) Allowance for Doubtful Accounts:

Account Titles               Debit        Credit

Beginning balance                        $1,950

Accounts receivable  $3,000

Bad Debts Expense                      14,820

Balance                       13,770

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