Westin Inc.has decided to call one-half of its bonds payable.In accordance with the bond contract,Westin Inc.may call and retire the bonds at 103.Immediately before the retirement,the balance sheet for Westin Inc.reports: $\begin{array}{ll}
11 \% \text { bonds payable } & \$ 200,000 \
\text { Premium on bonds payable } & 16,200
\end{array}$ What is the amount of the gain or loss on retirement?

Question

Quizplus · Accepted Answer

The correct answer is A. The gain on retirement is $5,100. The carrying value of the bonds is $216,200 ($200,000 + $16,200). The retirement price is $206,000 ($200,000 x 103%). The gain on retirement is the difference between the carrying value and the retirement price, which is $5,100 ($216,200 - $206,000).

Westin Inc 11% bonds payable $200,000 Premium on bonds payable 16,200\begin{array}{ll}11 \% \text { bonds payable } & \$ 200,000 \\\text { Premium on bonds payable } & 16,200\end{array}11% bonds payable Premium on bonds payable ​$200,00016,200​

Westin Inc $\begin{array}{ll}11 \% \text { bonds payable } & \$ 200,000 \\\text { Premium on bonds payable } & 16,200\end{array}$