On July 1, 2015, Immediately After Recording Interest Payments, Salsa

question 67

Multiple Choice

On July 1, 2015, immediately after recording interest payments, Salsa, Inc. retired one fifth of its $500,000 of bonds payable for $97,500. The bonds were originally issued at par value in 2010. Which of the following statements is correct?

• A) Stockholders' equity is not affected by the bond retirement.
• B) A gain of $2,500 will be reported on the income statement.
• C)A loss of $2,500 will be reported on the income statement.
• D)A gain of $402,500 will be reported on the income statement.

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