Final answer:
Without specific financial data, we cannot determine the exact loss Rentro Corp would report if its bonds are retired at a premium from the provided options. However, the loss would generally include the premium paid, the write-off of any remaining bond discount, and unamortized issue costs, minus any interest payable accrued.
Step-by-step explanation:
The student's question about the loss Rentro Corp would report if its bonds are retired at a premium does not provide enough numerical data to select an appropriate answer from the options given (a. $250,000; b. $337,500; c. $400,000; d. $460,000). To accurately determine the loss, specific values for the bonds payable, the discount on bonds payable, interest payable, unamortized bond issue costs, and the premium at which the bonds are retired are necessary.
If the bonds were retired at a premium, the loss on the retirement of the bonds would generally include the premium paid over the face value of the bonds, the write-off of any remaining discount, and the elimination of any unamortized bond issue costs, less any interest payable that has been accrued but not yet paid.
Regarding the reference questions on changes in interest rates affecting bond prices, when market interest rates rise, the value of existing bonds typically decreases because new bonds would be issued at the higher prevailing rates, making the lower-rate existing bonds less attractive. Hence, they must be sold at a discount to attract buyers. Conversely, if market interest rates fall, existing bonds with higher rates become more attractive, leading to their price increase so they can sell at a premium.