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On July 1, 2014, Miniature Company has bonds with balances as shown below. Premium on Bonds Payable Bonds Payable 65,000 3,250 If the company retires the bonds for $66,150, what will be the effect on the income statement? O loss on retirement of $2,100 0 loss on retirement of $4,400 O gain on retirement of $4,400 gain on retirement of $2,100
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Answer #1

Correct answer----Loss on retirement of $4,400

Book Value of bond on July 1

$ 65,000.00

Less: Balance in Premium on bond

$    3,250.00

Face value of bond

$ 61,750.00

Redeemable value of Bond

$ 66,150.00

Loss on retirement (66150-61750)

$    4,400.00
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