A Corporation Issued 8% Bonds with a Par Value of $1,000,000

question 216

Multiple Choice

A corporation issued 8% bonds with a par value of $1,000,000 at $1,020,000. On the interest date 5 years later, after the bond interest was paid and after 40% of the premium had been amortized, the corporation purchased the entire issue on the open market at 99 and retired it. The gain or loss on this retirement is:

• A)$0.
• B)$10,000 gain.
• C)$10,000 loss.
• D)$22,000 gain.
• E)$22,000 loss.