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Bonds Payable has a balance of $1,000,000 and Discount on Bonds Payable has a balance of $15,500. If the issuing corporation redeems the bonds at 98 1/2, what is the amount of gain or loss on redemption

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Tundexi

Answer:

Loss on Redemption = $500

Explanation:

Gain or Loss on redemption:  

Par value of Bonds                $1,000,000

Less: Discount on bonds       $15,500

Book Value of Bonds            $984,500

Less: Redemption value        $985,000  ($1,000,000 * 98.50%)  

Loss on Redemption             $500

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