Q.7. Three year 8% bonds of SR 100,000 issued on Jan. 1, 2007, are recalled at 105 on Dec. 31, 2008. Expenses of recall are SR 2,000. Market interest on issue date was 8%.

Q8. On Jan. 1, 2010, General Bell Corporation issued at 97%, bonds with a par value of SR 800,000 due in 20 years. It incurred bond issue cost totaling SR 16,000. Eight years after the issue date, General Bells calls the entire issue at 101% and cancels it. Compute the loss on redemption (extinguishment).