Answer:
The answer is a. gain on bond redemption of $10,000.
Explanation:
As the carrying value of the bond is up to $622,000, while the redemption only takes the company 600,000 x 102% = $612,000 ( that is, it takes $612,000 cash to clear $622,000 liabilities); the entry will include a gain on bond redemption of $10,000 which is calculated as $622,000 - $612,000 = $10,000.
Details entry should be:
Dr Bond payable 600,000
Dr Premium on bond 22,000
Cr Cash 612,000
Cr Gain on bond redemption 10,000
