On July 1, 2017, Adams Company has bonds with balances as shown below
Bonds Payable
71,000
Premium on Bonds Payable
3,800
If the company retires the bonds for $74,150, what will be the effect on the income statement?
A) gain on retirement of $6,950
B) loss on retirement of $6,950
C) gain on retirement of $650
D) loss on retirement of $650
C .Face value of the bonds being retired $71,000
Add: Premium on Bonds Payable 3,800
Carrying Amount of Bonds Payable $74,800
Market price paid to retire the bonds 74,150
Gain on retirement of Bonds Payable $650
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