9. Crazy Corporation issued $300,000 of 10%, 20-year bonds at 106 on January 1, 2012. Interest is payable semiannually on June 30 and December 31. Through January 1, 2017, Crazy amortized $3,000 of the bond premium. On January 1, 2017, Crazy retires the bonds at 102. What is the gain on bond retirement at January 1, 2017? a. $ 9,000 b. $18,000 C. $12.000 d. $ 3,000 Answer: a (in $000's) Balance Sheet Income Statement Transaction Liabil Cash Asset + Noncash Assets ities Contrib Capital Earned Capital Rev- enues Expen- ses Net Income LTD 315 Cash 306 GN LTD 315 -300 Long-Term Debt To retire bonds at 102, remove unamortized premium and report gain on 306 bond retirement -306 Cash +9 Retained Earnings +9 Gain on Bond Retirement +9 Cash -15 Premium on Bonds GN Retirement price - $300,000 - $300,000 X 102% Original premium = ($300,000 106%) - $300,000 - $18,000 Unamortized premium - $18,000 - $3,000 - $15,000 Financial Accou... Gocach