Answer:
The correct answer is $15,000.
Explanation:
According to the scenario, the given data are as follows:
Bonds payable balance = $1,000,000
Discount on bonds = $10,000
So, Balance in bonds = $1,000,000 - $10,000
= $990,000
Rate of bonds = 97.5
So , we can calculate the amount of gain or loss on redemption by using following formula:
First we calculate number of bonds = $1,000,000/$100
= 10,000
Now, we multiply the remaining by bond rate, we get
= 10,000 × 97.5
= 97,500
So, now we can calculate gain by using following method:
Gain = $990,000 - $975,000
= $15,000
Hence, the amount of gain is $15,000.
