Final answer:
The correct option is B: 'gain on bond redemption of $11,000'. This is derived by comparing the carrying value and the retirement cost of the bond, with the retirement cost being lower, resulting in a gain.
Step-by-step explanation:
When a $200,000 bond is retired at 101, and the carrying value of the bond is $213,000, the company has paid $202,000 to retire the bond ($200,000 × 101%). The carrying value of the bond is greater than the amount paid for retirement, which means the company will recognize a gain on bond redemption. The gain is calculated by subtracting the retirement cost from the carrying value, which is $213,000 - $202,000, resulting in a gain of $11,000.
The correct entry would include a gain on bond redemption of $11,000. Therefore, option B is the correct answer: 'B: gain on bond redemption of $11,000'.