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6 August, 12:30

Bonds Payable has a balance of $928,000 and Discount on Bonds Payable has a balance of $11,136. If the issuing corporation redeems the bonds at 98, what is the amount of gain or loss on redemption?

a.$11,136 loss

b.$7,424 loss

c.$7,424 gain

d.$11,136 gain

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  1. 6 August, 13:46
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    c.$7,424 gain

    Explanation:

    Book value of bonds payable:

    Par value of bonds payable $928,000

    Less: Discount on bonds payable $11,136

    Book value of bondds payable $916864

    Redemption value of bonds ($928,000*98%) $909440

    Gain on Redemption of bonds $7424

    Therefore, The amount of gain or loss on redemption is $7424.
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