Problem
I. Sydney Company issued 300 $1,000 bonds at 98. Each bond was issued with four detachable stock warrants. Shortly after issuance, the bonds were selling at 95, and the warrants were selling for $40 each.
Instructions: Prepare the entry to record the issuance of the bonds and warrants.
II. The Cinci Company issues $100,000, 10% bonds at 95 on November 1, 2022. The bonds are dated January 1, 2022 and mature ten years from that date. Straight-line amortization is used. Interest is paid annually each December 31.
Compute the bond carrying value as of December 31, 2026.
III. At December 31, 2025, the following balances existed for MICPA Corporation: Bonds Payable (6%) $600,000 Premium on Bonds Payable 12,000 The bonds mature on 12/31/28. Straight-line amortization is used.
If 40% of the bonds are retired at 104 on January 1, 2028, what is the gain or loss on early extinguishment?