Darouich Industries decided to retire an $1,000,000 bond issue before its due date. The bonds were callable by the company at 104. At the same time, the bonds were selling at 103 on the open market. The company was able to buy $500,000 of the bonds at 103 and called the remaining bonds. At that time, there was $125,000 in the Discount on Bonds Payable account. Compute the gain or loss on the retirement of the called bonds
Darouich Industries decided to retire an $1,000,000 bond issue before its due date. The bonds were callable by the company at 104. At the same time, the bonds were selling at 103 on the open market. The company was able to buy $500,000 of the bonds at 103 and called the remaining bonds. At that time, there was $125,000 in the Discount on Bonds Payable account. Compute the gain or loss on the retirement of the called bonds
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Darouich Industries decided to retire an $1,000,000 bond issue before its due date. The bonds were callable by the company at 104. At the same time, the bonds were selling at 103 on the open market. The company was able to buy $500,000 of the bonds at 103 and called the remaining bonds. At that time, there was $125,000 in the Discount on Bonds Payable account. Compute the gain or loss on the retirement of the called bonds.
Group of answer choices
$82,500 gain
$77,500 loss
$82,500 loss
$77,500 gain
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