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    confused_college_student's Avatar
    confused_college_student Posts: 8, Reputation: 2
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    #1

    Feb 7, 2008, 10:08 AM
    Bonds
    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's Avatar
    Scottish2008 Posts: 501, Reputation: 32
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    #2

    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?
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