On March 31, 2014, Bundy Corporation retired $10,000,000 of bonds, which have an unamortized premium of $500,000, by paying bondholders $9,850,000. How much was the gain or loss on the retirement of the bonds?
A. $150,000 loss.
B. $150,000 gain.
C. $650,000 gain.
D. $350,000 loss.

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abiolataiwo2015 abiolataiwo2015 · Answer 1 · 2021-07-10T02:01:23+02:00

Answer:

C. $650,000 gain.

Explanation:

Calculation to determine How much was the gain or loss on the retirement of the bonds

Using this formula

Gain or loss on retirement of bonds=Book value of bonds-Amount paid

Let plug in the formula

Gain or loss on retirement of bonds= ($10,000,000 + $500,000)-$9,850,000

Gain or loss on retirement of bonds=$10,500,000-$9,850,000

Gain or loss on retirement of bonds=$650,000 gain

Therefore the gain or loss on the retirement of the bonds will be $650,000 gain