Charlottes' Chocolate Company retires its 8% bonds for $850,000 before their scheduled maturity. The bonds...
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Charlottes' Chocolate Company retires its 8% bonds for $850,000 before their scheduled maturity. The bonds were originally issued two years ago at a face value of $800,000 for a price of $856,850. The market rate was 7%. Cash interest payments were made semi-annually as is common for most bonds. Required: Determine the following (a) Whether the bond was issued at a discount or premium: (b) The carrying value of the bond at the end of year two: (c) Whether the company recognizes a gain or loss when it retired the bonds: (d) The amount of gain or loss recognized when retiring the bonds (if any)
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