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Extinguishment of Bonds Prior to Maturity On December 1, 2014, Cone Company issued its 10%, $480,000 facevalue bonds for $560,000, plus accrued interest. Interest ispayable on November 1 and May 1.

Extinguishment of Bonds Prior to Maturity

On December 1, 2014, Cone Company issued its 10%, $480,000 facevalue bonds for $560,000, plus accrued interest. Interest ispayable on November 1 and May 1. On December 31, 2016, the bookvalue of the bonds, inclusive of the unamortized premium, was$510,000. On July 1, 2017, Cone reacquired the bonds at 98 plusaccrued interest. Cone appropriately uses the straight-line methodfor the amortization because the results do not materially differfrom those of the effective interest method.

Required:

Prepare a schedule to compute the gain or loss on thisredemption 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 $_________

May 26 2021 View more View Less

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