Sparks Company Received Proceeds of $423,000 on 10-Year, 8% Bonds

Multiple Choice

Sparks Company received proceeds of $423,000 on 10-year, 8% bonds issued on January 1, 2013. The bonds had a face value of $400,000, pay interest annually on December 31st, and have a call price of 102. Sparks uses the straight-line method of amortization. Sparks Company decided to redeem the bonds on January 1, 2015. What amount of gain or loss would Sparks report on their 2015 income statement?

A) $18,400 gain
B) $10,400 gain
C) $10,400 loss
D) $18,400 loss