A corporation paid $104,000 to retire bonds with a face value of $100,000 and an unamortized discount balance of $3,000.The entry to record the early retirement of the bonds will include the recognition of a loss of

Question

Quizplus · Accepted Answer

To retire bonds early, the corporation needs to pay the bond's face value plus any unamortized discount or less any unamortized premium. In this case, the face value of the bonds is $100,000, and the unamortized discount balance is $3,000. Therefore, the corporation paid $103,000 ($100,000 + $3,000) to retire the bonds. This means that the corporation recognized a loss of $1,000 ($104,000 - $103,000). Therefore, the correct answer is A.

A Corporation Paid $104,000 to Retire Bonds with a Face