Bonds Payable has a balance of $1,000,000 and Discount on Bonds Payable has a balance of $10,000. If the issuing corporation redeems t bonds at 97.5, what is the amount of gain or loss on redemption?

a. $25,000 loss

b. $ 10,000 loss

c. $25,000 gain

d. $15,000 gain

Question

Business

Cynthia Patterson

21 April, 04:45

Bonds Payable has a balance of $1,000,000 and Discount on Bonds Payable has a balance of $10,000. If the issuing corporation redeems t bonds at 97.5, what is the amount of gain or loss on redemption?

a. $25,000 loss

b. $ 10,000 loss

c. $25,000 gain

d. $15,000 gain

+3

Answers (1)

Know the Answer?

Freddie · Answer 1

d. $15,000 gain

Explanation:

For computing, the loss or gain on redemption, first we have to compute the redeemable value of the bond which is shown below:

= Bond payable balance * rate of bond

= $1,0000,000 * 0.975

= $975,000

And, after the discount, the balance of bond payable would be

= $1,000,000 - $10,000

= $990,000

SO, the difference would be

= $990,000 - $975,000

= $15,000 gain

Bonds Payable has a balance of $1,000,000 and Discount on Bonds Payable has a balance of $10,000. If the issuing corporation redeems t bonds at 97.5, what is the amount of gain or loss on redemption?a. $25,000 lossb. $ 10,000 lossc. $25,000 gaind. $15,000 gain

Bonds Payable has a balance of $1,000,000 and Discount on Bonds Payable has a balance of $10,000. If the issuing corporation redeems t bonds at 97.5, what is the amount of gain or loss on redemption?

a. $25,000 loss

b. $ 10,000 loss

c. $25,000 gain

d. $15,000 gain