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:

Billion

A numerical value equivalent to 1,000 million, often used to denote a very large quantity or amount in financial and statistical contexts.

Opportunity Costs

The loss of potential gain from other alternatives when one alternative is chosen, representing the benefits one misses out on when making a decision.

Excess Capacity

Excess capacity refers to a situation where a company is operating below its maximum output level, indicating that it can produce more with the current resources if there is higher demand.

Expansionary Fiscal Policy

To fight recessions, the federal government lowers taxes and/or raises spending.