Bonds Payable has a balance of $945,000 and Premium on Bonds Payable has a balance of $10,395. If the issuing corporation redeems the bonds at 102, what is the amount of gain or loss on redemption?
Select the correct answer.

a. $10,395 loss
b. $8,505 loss
c. $8,505 gain
d. $10,395 gain

Gain/(Loss) on redemption = Carrying value - Redemption value = ( Bond Payable Balance + Bond Premium) - ( Bond Payable balance * Redemption price) = ( 945,000 + 10,395) - (945,000 * 102%) = (8,505) which means the Redemption is recorded with a $8,505 loss

Or, the detailed journal entry for the redemption will be:

Dr Bond Payable 945,000

Dr Premium on Bonds 10,395

Dr Loss on redemption 8,505

Cr Cash 963,900

So, b is the right choice.

Bonds Payable has a balance of $945,000 and Premium on Bonds Payable has a balance of $10,395. If the issuing corporation redeems the bonds at 102, what is the amount of gain or loss on redemption? Select the correct answer. a. $10,395 loss b. $8,505 loss c. $8,505 gain d. $10,395 gain

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Bonds Payable has a balance of $945,000 and Premium on Bonds Payable has a balance of $10,395. If the issuing corporation redeems the bonds at 102, what is the amount of gain or loss on redemption?
Select the correct answer.

a. $10,395 loss
b. $8,505 loss
c. $8,505 gain
d. $10,395 gain