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Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2016. LPC's accountant has projected the following amortization schedule from issuance until maturity: Date Cash
Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2016. LPC's accountant has projected the following amortization schedule from issuance until maturity:
Date | Cash interest | Effective interest | Decrease in balance | Outstanding balance |
1/1/2016 | $207,020 | |||
6/30/2016 | $7,000 | $6,211 | $789 | 206,230 |
12/31/2016 | 7,000 | 6,187 | 813 | 205,417 |
6/30/2017 | 7,000 | 6,163 | 837 | 204,580 |
12/31/2017 | 7,000 | 6,137 | 863 | 203,717 |
6/30/2018 | 7,000 | 6,112 | 888 | 202,829 |
12/31/2018 | 7,000 | 6,085 | 915 | 201,913 |
6/30/2019 | 7,000 | 6,057 | 943 | 200,971 |
12/31/2019 | 7,000 | 6,029 | 971 | 200,000 |
LPC calls the bonds at 103 immediately after the interest payment on 12/31/2017 and retires them. What gain or loss, if any, would LPC record on this date?
$6,000 loss
$2,283 loss
No gain or loss
$3,717 gain
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