O'Sullivan Plastics Co. (OSPC) issued callable bonds on January 1, 2021. OSPC's accountant has projected...
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Accounting
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O'Sullivan Plastics Co. (OSPC) issued callable bonds on January 1, 2021. OSPC's accountant has projected the following amortization schedule from issuance until maturity:
Date
Cash interest
Effective interest
Decrease in balance
Outstanding balance
1/1/2021
$
207,020
6/30/2021
$
7,000
$
6,211
$
789
206,230
12/31/2021
7,000
6,187
813
205,417
6/30/2022
7,000
6,163
837
204,580
12/31/2022
7,000
6,137
863
203,717
6/30/2023
7,000
6,112
888
202,829
12/31/2023
7,000
6,085
915
201,913
6/30/2024
7,000
6,057
943
200,971
12/31/2024
7,000
6,029
971
200,000
OSPC calls the bonds at 103 immediately after the interest payment on 12/31/2022 and retires them. What gain or loss, if any, would OSPC record on this date?
No gain or loss
$3,717 gain
$6,000 loss
$2,283 loss
O'Sullivan Plastics Co. (OSPC) issued callable bonds on January 1, 2021. OSPC's accountant has projected the following amortization schedule from issuance until maturity:
| Date | Cash interest | Effective interest | Decrease in balance | Outstanding balance | ||||||||
| 1/1/2021 |
|
|
|
|
|
|
|
|
| $ | 207,020 |
|
| 6/30/2021 | $ | 7,000 |
| $ | 6,211 |
| $ | 789 |
|
| 206,230 |
|
| 12/31/2021 |
| 7,000 |
|
| 6,187 |
|
| 813 |
|
| 205,417 |
|
| 6/30/2022 |
| 7,000 |
|
| 6,163 |
|
| 837 |
|
| 204,580 |
|
| 12/31/2022 |
| 7,000 |
|
| 6,137 |
|
| 863 |
|
| 203,717 |
|
| 6/30/2023 |
| 7,000 |
|
| 6,112 |
|
| 888 |
|
| 202,829 |
|
| 12/31/2023 |
| 7,000 |
|
| 6,085 |
|
| 915 |
|
| 201,913 |
|
| 6/30/2024 |
| 7,000 |
|
| 6,057 |
|
| 943 |
|
| 200,971 |
|
| 12/31/2024 |
| 7,000 |
|
| 6,029 |
|
| 971 |
|
| 200,000 |
|
OSPC calls the bonds at 103 immediately after the interest payment on 12/31/2022 and retires them. What gain or loss, if any, would OSPC record on this date?
| No gain or loss | ||
| $3,717 gain | ||
| $6,000 loss | ||
| $2,283 loss |
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