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confused_college_student
Feb 7, 2008, 10:08 AM
Can someone explain how to do this problem? I have read in my book, but I don't understand it. I can't figure out the math.

Renoir Enterprises called 400 of its $1,000 face value bonds that had been outstanding for 7 years of the scheduled 30-year life. The bonds were recorded on the books, when called, at $400,000 and had a market value of $417,500. The company paid $1,020 for each called bond. What amount of gain or loss should the company report from this transaction?

a. $18,500 loss
b. $8,000 loss
c. $17,500 loss
d. $9,500 gain

Thank you.

Juile

Scottish2008
Feb 7, 2008, 10:32 AM
I would go with C
$400,000 for face value of 400 bonds
$417,500 for Market Value of 400 bonds

$417,500 - $400,000 = $17,500 loss

Is this what you came up with?