32 At December 31st 2017 the following balances existed on F

32. At December 31st, 2017 the following balances existed on Fox Corporation: Bonds Payable Premium on Bonds Payable $5,000,000 400,000 If the bonds are retired on January 1st, 2018 at 102, how much is the gain on redemption? A) $500,000 B) $300,000 C) $100,000 D) $400,000

Solution

Answer:

Option B) $300,000

Explanation

Gain on redemption of Bonds

=(5,000,000+400,000) - (5,000,000*1.02)

= 300,000