Darouich Industries decided to retire an $4,000,000 bond issue before its due date. The bonds were callable by the company at 102. At the same time, the bonds were selling at 101 on the open market. The company was able to buy $2,000,000 of the bonds at 101 and called the remaining bonds. At that time, there was $500,000 in the Discount on Bonds Payable account. Compute the gain or loss on the retirement of the called bonds.
A) $270,000 gain
B) $270,000 loss
C) $290,000 gain
D) $290,000 loss
Correct Answer:
Verified
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