Golden Company received proceeds of $94,250 on 10-year, 8% bonds issued on January 1, 2006. The bonds had a face value of $100,000, pay interest annually on December 31st, and have a call price of 101. Golden uses the straight-line method of amortization.
Golden Company decided to redeem the bonds on January 1, 2008. What amount of gain or loss would Golden report on its 2007 income statement?
a. $4,600 gain
b. $5,600 gain
c. $5,600 loss
d. $4,600 loss