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Retirement of Bonds for Marin Co.

The December 31, 2004 balance sheet of Marin Co. included the following items:
7.5% bonds payable due December 31, 2012 \$800,000
Unamortized discount on bonds payable 32,000

The bonds were issued on December 31, 2002 at 95, with interest payable on June 30 and December 31. (Use straight-line amortization.)

On April 1, 2005, Marin retired \$160,000 of these bonds at 101 plus accrued interest.

Bond Interest Expense 3200
Cash 3000
(160,000 X 7.5 X 3/12)
Discount on Bonds Pay 200
(32,000 X 1/5 X 1/8 X 3/12)

Bonds Payable 160,000
Loss on Redemption of Bonds ?
Discount on Bonds Payable 6200
[(1/5 X 32,000) -200]
Cash ?

I am stuck on how to figure the loss/cash. Can someone explain it to me? Are the rest of the figures correct?

Solution Preview

Interest Expense............................. 3,200
Cash (\$160,000 x 7.5% x 3/12).............. 3,000
...

Solution Summary

The retirement of bonds for Marin Co. are examined.

\$2.19