Paper Corporation holds 80 percent of the voting shares of Scissor Company. On January 1, 20X8, Scissor purchased $100,000 par value 12 percent Paper bonds from Cruse Corporation for $115,000. Paper originally issued the bonds to Cruse on January 1, 20X6, for $110,000. The bonds have an 8-year maturity from the date of issue and pay interest semiannually on June 30 and December 31 each year. Scissor' reported net income of $65,000 for 20X8, and Paper reported income (excluding income from ownership of Scissor's stock) of $90,000. Paper's partial bond amortization schedule is as follows:

PMT #				Interest $ PMT				Interest Expense			Amort of Discount (Premium)				Premium (Discount)				Bonds Payable				BV of Bonds
		1/1/20X6															10,000.00				100,000.00				110,000.00
1		6/30/20X6				6,000.00			5,579.78				(420.22	)			9,579.78				100,000.00				109,579.78
2		12/31/20X6				6,000.00			5,558.47				(441.53	)			9,138.25				100,000.00				109,138.25
3		6/30/20X7				6,000.00			5,536.07				(463.93	)			8,674.33				100,000.00				108,674.33
4		12/31/20X7				6,000.00			5,512.54				(487.46	)			8,186.86				100,000.00				108,186.86
5		6/30/20X8				6,000.00			5,487.81				(512.19	)			7,674.68				100,000.00				107,674.68
6		12/31/20X8				6,000.00			5,461.83				(538.17	)			7,136.51				100,000.00				107,136.51

38) Based on the information given above, what gain or loss on the retirement of bonds should be reported in the 20X8 consolidated income statement?

A) $6,326 gain

B) $6,813 gain

C) $6,813 loss

D) $6,326 loss

Answer: C

Please explain why you get this number.