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On September 1, 2020, Hall Corp. retired early its 15 year bonds with a face of...

On September 1, 2020, Hall Corp. retired early its 15 year bonds with a face of $500,000, 12% stated rate for $505,000 cash. At that date there was unamortized bond discount of $10,000 on the books. What is the overall net amount of gain or loss the company would show on the retirement of the bonds payable?

a. $ 15,000 gain

b. $ 18,000 loss

c. $ 12,000 loss

d. $ 12,000 gain

e.$ 15,000 loss

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Answer #1

ANSWER E. $15,000 LOSS

ENTRY

BONDS PAYABLE DR $500,000

LOSS ON RETIREMENT (BF) DR $15,000

UNAMORTIZED BOND DISCOUNT CR $10,000

CASH CR $505,000

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