Washington inc. issued $705,000 of 6%, 20-year bonds at 98 on january 1, 2009. through january 1, 2017, washington amortized $8,200 of the bond discount. on january 1, 2017. washington inc. retired the bonds at 102 (after making the interest payment on that date). what is the gain or loss that washington inc. would report for the retirement of this bond?

$20,000

Explanation:

Bond discount at the issuance of bond:

= Worth of Bonds issued -  [(Worth of Bonds issued ÷ 100) × Issue price]

= 705,000 - [($705,000 ÷ 100) × 98]

= $705,000 - $690,900

= $14,100

Bond Payable = $705,000

Unamortized bond discount:

= Bond discount at the issuance of bond - Amortized amount

= $14,100 - $8,200

= $5,900

Redemption Value of Bond = Retired price of bonds × 7,050

                                              = 102 × 7,050

                                              = $719,100

Loss on retirement on Bond:

= Redemption Value of Bond - (Worth of Bonds issued -  Unamortized bond discount)

= 719,100 - (705,000 - 5,900)

= 719,100 - 699,100

= $20,000

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20

y=mx+b is the right slope of velocity carry the 4 over