Redemption of Bonds McGee Company issued $200,000 face value bonds at a premium of $4,500. The bonds
Question:
Required
1. Calculate the gain or loss on the early redemption of the bonds.
2. Calculate the gain or loss on the redemption assuming that the call provision is 103 instead of 101.
3. Indicate where the gain or loss should be presented on the financial statements.
4. Why do you suppose the call price is normally higher than 100?
Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
1 Redemption price 200000 101 202000 Carrying value 200000 4500 1000 203500 Gain on rede...View the full answer
Answered By
Akshay Agarwal
I am a Post-Graduate with a specialization in Finance. I have been working in the Consulting industry for the past 8 years with a focus on the Corporate and Investment Banking domain. Additionally, I have been involved in supporting student across the globe in their academic assignments and always strive to provide high quality support in a timely manner. My notable achievements in the academic field includes serving more than 10,000 clients across geographies on various courses including Accountancy, Finance, Management among other subjects. I always strive to serve my clients in the best possible way ensuring high quality and well explained solutions, which ensures high grades for the students along-with ensuring complete understanding of the subject matter for them. Further, I also believe in making myself available to the students for any follow-ups and ensures complete support and cooperation throughout the project cycle. My passion in the academic field coupled with my educational qualification and industry experience has proved to be instrumental in my success and has helped me stand out of the rest. Looking forward to have a fruitful experience and a cordial working relationship.
179+ Reviews
294+ Question Solved
Related Book For 
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1133161646
7th Edition
Authors: Gary A. Porter, Curtis L. Norton
Question Posted:
