Enterprise Group issued

$100,000

of 3-year,

6%

bonds on December 31,2025 , for

$106,000

. Enterprise uses straight-line amortization. On May

1,2026,$10,000

of the bonds were retired at 110 . As a result of the retirement, Enterprise will report a:\ a.

$400

loss\ b.

$467

loss\ c.

$1,100

loss\ The correct answer is

b

:\ d.

$1,100

gain Interest expense (to balance) 133 Premium on bonds payable

([$6,000\\\\times (1)/(3)\\\\times (4)/(12))]\\\\times 10%

Interest payable

([$100,000\\\\times 6%\\\\times (4)/(12)]\\\\times 10%)

\ Bonds payable (book value) 10,553\ Loss on early extinguishment (to balance)\ 467\ Cash (call price)\ 11,000\ Paid at redemption:

$10,000\\\\times 110%=

\ Book value:

[$106,000-($6,000\\\\times (1)/(3)\\\\times (4)/(12))]\\\\times 10%=

Loss\

$11,000

\ 10,533\

$,467

Enterprise Group issued $100,000 of 3 -year, 6% bonds on December 31,2025 , for $106,000. Enterprise uses straight-line amortization. On May 1,2026,$10,000 of the bonds were retired at 110 . As a result of the retirement, Enterprise will report a