On July 1, 2017, Miniature Company has bonds with balances as shown below
Bonds Payable
70,000
Discount on Bonds Payable
3,600
If the company retires the bonds for $71,150, what will be the effect on the income statement?
A) loss on retirement of $4,750
B) gain on retirement of $4,750
C) sales revenue of $66,400
D) no effect on net income
A .Face value of the bonds being retired $70,000
Less: Discount on Bonds Payable 3,600
Carrying Amount of Bonds Payable $66,400
Market price paid to retire the bonds 71,150
Loss on retirement of Bonds Payable $(4,750 )
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