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Answer :
The amount of loss on redemption is $15,360. To calculate the amount of gain or loss on redemption, we need to subtract the carrying value of the bonds payable from the cash paid to redeem the bonds.
The carrying value of the bonds payable is the difference between the bonds payable balance and the discount on bonds payable balance. The cash paid to redeem the bonds is calculated by multiplying the redemption price (97.5% or 0.975) by the face value of the bonds payable ($1,024,000).
So, the cash paid is $1,024,000 * 0.975 = $998,400. To find the gain or loss, we subtract the carrying value from the cash paid: $998,400 - $1,013,760 = -$15,360. Therefore, the amount of loss on redemption is $15,360.
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