Beonce Company Received Proceeds of $188,000 on 10-Year, 6% Bonds

question 52

Multiple Choice

Beonce Company received proceeds of $188,000 on 10-year, 6% bonds issued on January 1, 2013. The bonds had a face value of $200,000, pay interest annually on January 1, and have a call price of 101. Beonce uses the straight-line method of amortization. Beonce Company decided to redeem the bonds on January 1, 2015. What amount of gain or loss would Beonce report on its 2015 income statement?

• A) $9,600 gain
• B) $11,600 gain
• C) $11,600 loss
• D) $9,600 loss

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Definitions:

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, typically used by businesses to manage liquidity and ensure they can meet their cash requirements.

Short-term Financial Management

The practice of managing a company's financial activities that are expected to be resolved within a year.

Carrying Costs

The expenses incurred by holding inventory, including storage, insurance, and taxes, over a certain period.

Cash Cycle

A business concept that describes the process of converting resources into cash flows, from purchasing inventory to collecting revenue from customers.