Bonds Payable has a balance of $5,000,000 and Dis- count on Bonds Payable has a balance...

Bonds Payable has a balance of $5,000,000 and Dis- count on Bonds Payable has a balance of $150,000. If the issuing corporation redeems the bonds at 98, is there a gain or loss on the bond redemption?

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Expert Solution

Answer:	Amount paid on redemption		$ 4,900,000.00
Less:	Carrying Value of bonds
	Outstanding balance of bonds payable	$ 5,000,000.00
	Less: Discount on issue of bonds	$ (150,000.00)	$ 4,850,000.00
	Loss on redemption of bonds		$ 50,000.00	($4,900,000-$4,850,000)

	There would be loss on redemption of bonds $50,000.

ekkarill92 answered 10 months ago

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