On March 31, 2016, Bundy Company retired $10,300,000 of bonds, which have an unamortized premium of $550,000, by paying bondholders $10,125,000. What is the amount of the gain or loss on the retirement of the bonds?
On July 1, 2017, immediately after recording interest payments, Salsa, Inc. retired one fifth of its $504,000 of bonds payable for $97,900. The bonds were originally issued at par value in 2012. Which of the following statements is correct?
A loss of $2,900 will be reported on the income statement.
Stockholders’ equity is not affected by the bond retirement.
A gain of $2,900 will be reported on the income statement.
A gain of $406,100 will be reported on the income statement.