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Question(s) / Instruction(s):

A corporation issued 8% bonds with a par value of $1,000,000, receiving a $20,000 premium. On the interest date 5 years later, after the bond interest was paid and after 40% of the premium had been written off, the corporation purchased the entire issue on the open market at 99 and retired it. The gain or loss on this retirement is:

a)            $0.

b)            $10,000 gain.

c)            $10,000 Loss.

d)            $22,000 gain.

e)            $22,000 loss.

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