On February 1,2015,Pat Weaver Inc.(PWI)issued 10%,$1,000,000 bonds for $1,116,000.PWI retired all of these bonds on January 1,2016,at 102.Unamortized bond premium on that date was $92,800.How much gain or loss should be recognized on this bond retirement?

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The bonds were retired at 102% of $1,000,000, which is $1,020,000. The carrying amount of the bonds was $1,092,800 ($1,000,000 + $92,800 unamortized premium). The loss is the difference between the carrying amount and the retirement price: $1,092,800 - $1,020,000 = $72,800 gain.