A $300,000 bond was redeemed at 98 when the carrying value of the bond was $292,000. The entry to record the redemption would include a
A) loss on bond redemption of $4,000
B) gain on bond redemption of $4,000
C) gain on bond redemption of $2,000
D) loss on bond redemption of $2,000

Question

Quizplus · Accepted Answer

The carrying value of the bond was $292,000, but it was redeemed for $300,000, which means there was a loss of $8,000. Therefore, the entry to record the redemption would include a loss on bond redemption of $8,000. 
The formula to calculate the gain/loss on bond redemption is:
Redemption price - Carrying value = Gain/Loss on redemption
$300,000 - $292,000 = $8,000 (loss on redemption)

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