Elmira,Inc.had $20,000,000 of callable bonds outstanding on December 31,2016.The ten-year bonds were issued on January 1,2010 for $21,100,000 and incurred $100,000 in bond issue costs.Acme can call the bonds at 102 anytime after January 1,2016.The company uses straight-line amortization for bond issue costs and bond premium.Acme decides to call the bonds on January 2,2017.
Required:
1.Compute the gain or loss on early extinguishment of debt.
2.Prepare the journal entry to record the debt extinguishment.

Question

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The Answer of Elmira,Inc.had $20,000,000 of callable bonds outstanding on December 31,2016.The ten-year bonds were issued on January 1,2010 for $21,100,000 and incurred $100,000 in bond issue costs.Acme can call the bonds at 102 anytime after January 1,2016.The company uses straight-line amortization for bond issue costs and bond premium.Acme decides to call the bonds on January 2,2017.
Required:
1.Compute the gain or loss on early extinguishment of debt.
2.Prepare the journal entry to record the debt extinguishment.