A $300,000 bond was redeemed at 98 when the carrying value of the bond was $295,000. The entry to record the redemption would include a
A) loss on bond redemption of $5,000.
B) gain on bond redemption of $5,000.
C) gain on bond redemption of $1,000.
D) loss on bond redemption of $1,000.

Question

Quizplus · Accepted Answer

The bond was redeemed at 98% of its face value, which is $294,000 ($300,000 x 0.98). The carrying value was $295,000, so the gain is $1,000 ($295,000 - $294,000).

A $300,000 Bond Was Redeemed at 98 When the Carrying