Redemption of a Bond at Maturity
On March 31, 2008, Sammonds Inc. issued $250,000 face value bonds at a discount of $7,000. The
bonds were retired at their maturity date, March 31, 2018.
Assuming that the last interest payment and the amortization of the discount have already been
recorded, calculate the gain or loss on the redemption of the bonds on March 31, 2018. Indicate
the effect on the accounting equation of the redemption of the bonds.