A $600,000 Bond Was Retired at 103 When the Carrying

question 112

Multiple Choice

A $600,000 bond was retired at 103 when the carrying value of the bond was $622,000. The entry to record the retirement would include a

• A) gain on bond redemption of $18,000.
• B) loss on bond redemption of $12,000.
• C) loss on bond redemption of $18,000.
• D) gain on bond redemption of $4,000.

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Definitions:

Preference Rights

Rights giving certain shareholders or bondholders a priority claim over assets or earnings, typically in the event of liquidation or dividend distribution.

Authorized Shares

The maximum number of shares a corporation is legally allowed to issue, as specified in its articles of incorporation.

Paid-In Capital

The total amount of money that shareholders have invested in a company through the purchase of stock.

Issue Price

This refers to the price at which new securities are issued to the public or to investors by the issuing company.