Sparks Company Received Proceeds of $634,500 on 10-Year, 8% Bonds

question 102

Multiple Choice

Sparks Company received proceeds of $634,500 on 10-year, 8% bonds issued on January 1, 2016. The bonds had a face value of $600,000, pay interest annually on December 31st, and have a call price of 102. Sparks uses the straight-line method of amortization. Sparks Company decided to redeem the bonds on January 1, 2018. What amount of gain or loss would Sparks report on their 2018 income statement?

• A)$27,600 gain
• B)$15,600 gain
• C)$15,600 loss
• D)$27,600 loss

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