On January 1, 2014, Benbrook Company issued bonds with a face value of $50,000. The bonds mature in five years, and pay interest annually at a stated rate of 10%. Since the market rate at the time of the issue was 12%, the bonds were sold at a discount; the actual issue price was $46,395.
On January 1, 2016, Benbrook decides to redeem the bonds payable at the specified redemption price of 101.
What is the carrying value of the bonds on the redemption date?
| a. |
$50,000
|
| b. |
$47,598
|
| c. |
$46,962
|
| d. |
$46,395
|
| e. |
none of the above
|
Refer to the information above for Benbrook Corporation.
How much gain or loss with the company recognize on the bond redemption?
| a. |
$500 loss
|
| b. |
$2,902 loss
|
| c. |
$3,538 loss
|
| d. |
$3,605 loss
|
| e. |
none of the above
|