Sparks Company Received Proceeds of $423,000 on 10-Year, 8% Bonds

question 113

Multiple Choice

Sparks Company received proceeds of $423,000 on 10-year, 8% bonds issued on January 1, 2013. The bonds had a face value of $400,000, pay interest annually on December 31st, and have a call price of 102. Sparks uses the straight-line method of amortization. Sparks Company decided to redeem the bonds on January 1, 2015. What amount of gain or loss would Sparks report on their 2015 income statement?

• A) $18,400 gain
• B) $10,400 gain
• C) $10,400 loss
• D) $18,400 loss

Know the benefits and responsibilities of home ownership, including maintenance, insurance, and property tax considerations.

Understand the role and services provided by real estate agents in the home buying and selling process.

Understand how to calculate affordable home purchase prices based on income, debt, mortgage rates, and down payments.

Comprehend the concept of amortization and its impact on loan repayment.

---

Definitions:

Debit Column

is a section in accounting records where increases in asset and expense accounts or decreases in liability, equity, and revenue accounts are entered.

Credit Column

The column in an accounting ledger where credit transactions are recorded, reflecting increases in liabilities, equity, or revenue, or decreases in assets or expenses.

Service Revenue

The income a company earns from providing services as opposed to selling physical goods, and it is recorded as it is earned in the accounting period.

Balance Sheet Columns

Sections in a balance sheet that categorize assets, liabilities, and shareholder's equity at a specific point in time.