Cortez Company issues $4,000,000 face value of bonds at 96 on January 1, 2013. The bonds are

Question:

Cortez Company issues $4,000,000 of bonds at 96 on January 1, 2013. The bonds are dated January 1, 2013, pay interest semiannually at 8% on June 30 and December 31, and mature in 10 years. Straight-line amortization is used for discounts and premiums. On September 1, 2016, $2,400,000 of the bonds are called at 102 plus accrued interest. What gain or loss would be recognized on the called bonds on September 1, 2016?
A $240,000 loss
B $181,000 loss
C $108,800 loss
D $144,000 loss
Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...