Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2018. LPC's accountant has projected...
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Accounting
Lopez Plastics Co. (LPC) issued callable bonds on January 1, 2018. LPC's accountant has projected the following amortization schedule from issuance until maturity:
Date
Cash
interest
Effective
interest
Decrease in
balance
Outstanding
balance
1/1/2018
$
207,020
6/30/2018
$
7,000
$
6,211
$
789
206,230
12/31/2018
7,000
6,187
813
205,417
6/30/2019
7,000
6,163
837
204,580
12/31/2019
7,000
6,137
863
203,717
6/30/2020
7,000
6,112
888
202,829
12/31/2020
7,000
6,085
915
201,913
6/30/2021
7,000
6,057
943
200,971
12/31/2021
7,000
6,029
971
200,000
LPC calls the bonds at 95 (95% of the face value) immediately after the interest payment on 06/30/2019 and retires them. What gain or loss, if any, would LPC record on this date?
Group of answer choices
$5,420 loss
$14,580 loss
$14,580 gain
$5,420 gain
Answer & Explanation
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