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Question
herman company received proceeds of 188,500 on 10-year, 8% bonds issued on january 1, 2010. the bonds had a face value of 200,000, pay interest semi-annually on june 30 and december 31, and have a call price of 101. herman uses the straight-line method of amortization.
herman company decided to redeem the bonds on january 1, 2012. what amount of gain or loss would herman report on its 2012 income statement?
a.9,200 gain
b.11,200 gain
c.11,200 loss
d.9,200 loss
Answer
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