Hicks Company's Bonds Payable has a balance of $1,200,000 and Discount on Bonds Payable has a balance of $15,000.
If the issuing corporation retires the bonds at a market price of 97, what is the amount of gain or loss on retirement?

Question

Quizplus · Accepted Answer

Book value of Bond $1,200,000 - $15,000= $1,185,000
Retirement Price = $1,200,000 x 0.97 = $1,164,000
Gain on Retirement = $1,185,000 - $1,164,000 = $21,000

Hicks Company's Bonds Payable Has a Balance of $1,200,000 and Discount