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What is the amount of the gain or loss on retirement

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Question - Moon Inc., has decided to call one-half of its bonds payable. In accordance with the bond contract, Moon Inc. may call and retire the bonds at 103. Immediately before the retirement, the balance sheet for Moon Inc. reports:

9% bonds payable - $400,000

Discount on bonds payable - 2,500

What is the amount of the gain or loss on retirement?

A) loss of $8,500

B) loss of $7,250

C) gain of $7,000

D) gain of $8,500

Reference no: EM132224115

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