On March 31,2019,Bundy Company retired $10,000,000 of bonds,which have an unamortized premium of $500,000,by paying bondholders $9,850,000.What is the amount of 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.

Question

Quizplus · Accepted Answer

To find out the gain or loss on the retirement of bonds, we need to subtract the amount paid to bondholders from the carrying value of the bonds.

Carrying value of bonds = $10,000,000 + $500,000 premium = $10,500,000

Gain or loss = Carrying value of bonds - Amount paid to bondholders 
= $10,500,000 - $9,850,000 
= $650,000 gain

Therefore, the answer is C, $650,000 gain.

On March 31,2019,Bundy Company Retired $10,000,000 of Bonds,which Have an Unamortized