A $200,000, 10% bond issue was sold at face value and later redeemed at 109. The corporation would have a:

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The corporation would have a loss of $18,000 because the bonds were redeemed at 109% of their face value, meaning they were bought back for 109% of $200,000, which is $218,000. Since they were initially sold at their face value of $200,000, the corporation had to pay an extra $18,000 to redeem them, resulting in a loss.

A $200,000, 10% Bond Issue Was Sold at Face Value