Winrow Company Received Proceeds of $754,000 on 10-Year, 8% Bonds

question 99

Multiple Choice

Winrow Company received proceeds of $754,000 on 10-year, 8% bonds issued on January 1, 2019.The bonds had a face value of $800,000, pay interest annually on December 31, and have a call price of 101.Winrow uses the straight-line method of amortization.Winrow Company decided to redeem the bonds on January 1, 2021.What amount of gain or loss would Winrow report on its 2021 income statement?

• A)$36,800 gain
• B)$44,800 gain
• C)$44,800 loss
• D)$36,800 loss

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Definitions:

Future Dollars

Money that is adjusted for its future value, accounting for inflation or interest earned over time.

Expected Rate of Return

The anticipated amount of profit or loss an investor expects to achieve on an investment.

Interest Rate

The Interest Rate is the percentage at which interest is paid by a borrower for the use of money that they borrow from a lender.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.