Final answer:
The student's question is about calculating the loss on the redemption of bonds. By redeeming the bonds at 102%, the redemption price is $838,440, and since the carrying value is $831,042, the corporation will face a loss of $7,398.
Step-by-step explanation:
The student is asking about accounting and specifically how to calculate the gain or loss on the redemption of bonds before their maturity date. This involves understanding the bonds payable balance, the premium on bonds payable, and the concept of redemption at a percentage of the bond's face value.
First, we need to determine the redemption value of the bonds. If bonds with a face value of $822,000 are redeemed at 102% of their face value, the redemption price would be 822,000 × 102% = $838,440. Next, we assess the carrying value which is the sum of the bonds payable and the premium on the bonds payable: 822,000 + 9,042 = $831,042.
The gain or loss on redemption is the difference between the carrying value and the redemption price. Therefore, if we subtract the carrying value from the redemption price, we would calculate a loss: 838,440 - 831,042 = $7,398.