The 10% Bonds Payable of Nixon Company Had a Net

question 112

Multiple Choice

The 10% bonds payable of Nixon Company had a net carrying amount of $950,000 on December 31, 2014. The bonds, which had a face value of $1,000,000, were issued at a discount to yield 12%. The amortization of the bond discount was recorded under the effective-interest method. Interest was paid on January 1 and July 1 of each year. OnJuly 2, 2015, several years before their maturity, Nixon retired the bonds at 102. The interest payment on July 1, 2015 was made as scheduled. What is the loss that Nixon should record on the early retirement of the bonds on July 2, 2015? Ignore taxes.

• A) $20,000.
• B) $63,000.
• C) $56,000.
• D) $70,000.

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Definitions:

Inaccurate Interpretations

Misunderstandings or wrong conclusions drawn from data, events, or communications, often due to bias, lack of information, or miscommunication.

Understanding

The process of comprehending concepts, situations, or the perspectives of others.

Worldviews

Broad frameworks or sets of beliefs through which individuals interpret the world and their place within it.

Self-fulfilling Prophecy

A belief or expectation that influences actions in a way that causes the belief to become true.