Bargain Company has $1,500,000 of bonds outstanding.The unamortized premium is $19,600.If the company redeemed the bonds at 101, what would be the gain or loss on the redemption?

Question

Quizplus · Accepted Answer

The redemption price is 101% of $1,500,000, which is $1,515,000. The carrying amount of the bonds is $1,500,000 + $19,600 = $1,519,600. The gain on redemption is $1,519,600 - $1,515,000 = $4,600.

Bargain Company Has $1,500,000 of Bonds Outstanding