Birks Company decided to issue $200,000 face value bonds on January 1, 2017.The annual stated rate on the bonds was 6%.The bonds call for interest to be paid semiannually on June 30 and December 31, and the principal must be repaid on December 31, 2021 (five years from the issue date).At the time the bonds were issued, investor sentiment about similar bonds of similar companies was such that the company received $183,778.

1.- Assume that the annual market rate of interest changes to 7% on December 31, 2020 and Birks decides to retire the bonds on that date. What would the effect on net income be of the retirement of the bonds?

(report a loss in parentheses.)