Herman Company Received Proceeds of ₤471,250 on 10-Year, 8% Bonds

Multiple Choice

Herman Company received proceeds of ₤471,250 on 10-year, 8% bonds issued on January 1, 2015. The bonds had a face value of ₤500,000, pay interest semi-annually on June 30 and December 31, and have a call price of 101. Herman uses the straight-line method of amortization.
Herman Company decided to redeem the bonds on January 1, 2017. What amount of gain or loss would Herman report on its 2017 income statement?

A) ₤23,000 gain
B) ₤28,000 gain
C) ₤28,000 loss
D) ₤23,000 loss