After making its interest payment, Good Omens Corporation has decided to retire its $48,000 face value bonds December 31. On that day, the unamortized discount is $3,200. The company called the bonds at 101. Determine the gain or loss on the retirement on bonds.

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Business

Nelson Williamson

19 July, 08:02

After making its interest payment, Good Omens Corporation has decided to retire its $48,000 face value bonds December 31. On that day, the unamortized discount is $3,200. The company called the bonds at 101. Determine the gain or loss on the retirement on bonds.

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Brianna Bradley · Answer 1

The loss is $3,680

Explanation:

In this question, we are asked to calculate if the gain or loss on the retirements of bonds.

We start by subtracting the sales value of bond and unamortised discount from face value of bonds

we are given the unamortised discount in the question but we do not know sales value of bonds.

We calculate that as follows;

we assume that the face value of bond is $100 per bond

The number of share issue = 48,000/100 = 480 bonds

The sales value of bond = number of shares sold * sales value per bond. = 480 * 101 = $48,480

Thus, the loss on sales of bond = 48,000-48,480 - 3,200 = - $3,680