19. Murley Computer Services issued bonds with a par value of $200,000. The unam

Question

19. Murley Computer Services issued bonds with a par value of $200,000. The unamortized discount on these bonds is $9,000. The company retired these bonds by buying them on the open market at 97. What is the gain or loss on this retirement? gpen market at 97, ht te compay rotired thee A. $0 gain or loss. B. $3,000 gain. C. $6,000 loss. D. $6,000 gain. E. $3,000 loss. 20. Hollingsworth Inc, issued bonds with a par value of $600,000. The unamortized premium on these bonds is $16,200. The company retired these bonds at a call price of 99 What is the gain or loss on this retirement? A. $16,200 loss B. $22,200 gain. C. $22,200 loss. D. $16,200 gain E. $18,000 loss.

Explanation / Answer

19) Carrying value of bond = 200000-9000 = $      1,91,000 Amount paid = 200000*97% = $      1,94,000 Loss = 194000 - 191000 = $            3,000 Answer: Option [E] 20) Carrying value of bond = 600000+16200 = $      6,16,200 Amount paid = 600000*99% = $      5,94,000 Gain = 616200 - 594000 = $         22,200 Answer: Option [B]

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