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Cann Corp. issued bonds with a face value of $100,000 and a stated interest rate of 8%. Cann Corp. retired these bonds for $125,000 before the maturity date. At the time, the bonds had a carrying value of $118,000. Determine the amount of gain or loss on the bond retirement.

Respuesta :

jepessoa

Answer:

loss on the retirement of bonds = $7,000

Explanation:

the gain or loss resulting from the retirement of bonds is determined by the carrying value of bonds - retirement value of bonds = $118,000 - $125,000 = -$7,000 loss

Dr Bonds payable 100,000

Dr Loss on retirement of bond 7,000

Dr Premium on bonds payable 18,000

    Cr Cash 125,000

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