Bonds Payable has a balance of $1,000,000, and Discount on Bonds Payable has a balance of $12,500. If the issuing corporation redeems the bonds at 99, what is the amount of gain or loss on redemption? a.$22,500 gain b.$2,500 loss c.$2,500 gain d.$22,500 loss

The correct answer is B,  a loss of $2500

Explanation:

In calculating whether a loss or gain is recorded upon redemption of the bond ,it is very pertinent to compare proceeds payable to bondholders through redemption and the book value of the bond

Proceeds                                            $1000000*$99/$100=$990,000

Carrying value                                     ($1000000-$12500)=$987500

Loss on redemption                                                                  $2500

This means that amount paid to bondholders is more than the amount realized when bond was sold initially.

d. the economy will face inflation.

the answer would be voluntary exchange -

"the act of buyers and sellers freely and willingly engaging in market transactions. moreover, transactions are made in such a way that both the buyer and the seller are better off after the exchange than before it occurred."

hope this : )

-shy