The December 31, 2020, Statement of Financial Position of Cotton

question 48

Multiple Choice

The December 31, 2020, statement of financial position of Cotton Corporation includes the following: 9% bonds payable due December 31, 2026 $ 718,000
The bonds have a face value of $ 700,000, and were issued on December 31, 2019, at 103, with interest payable on July 1 and December 31 of each year. Cotton uses straight-line amortization to amortize bond premium or discount. On March 1, 2021, Cotton retired $ 280,000 of these bonds at 98 plus accrued interest. Ignoring income taxes, what should Cotton record as a gain on retirement of these bonds?

• A) $ 7,560
• B) $ 12,600
• C) $ 12,800
• D) $ 14,000

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Definitions:

Manager

A person responsible for controlling or administering an organization or group of staff.

Centralisation

The organizational structure where decision-making authority is concentrated at the top levels of management, often resulting in a hierarchy of power.

Decentralisation

Decentralisation is the dispersion of authority to make decisions throughout all levels of the organisation.

Managerial Advice

Guidance or recommendations provided by someone in a supervisory role, intended to improve an individual's or team's performance and decision-making.