Because Interest Rates Have Fallen,a Company Retires Bonds Which Had

question 33

Multiple Choice

Because interest rates have fallen,a company retires bonds which had been issued at their face value of $200,000.The company bought the bonds back at 97.The journal entry to record this retirement includes a debit of:

• A)$200,000 to Bonds Payable,a credit of $6,000 to Gain on Bond Retirement,and a credit of $194,000 to Cash.
• B)$194,000 to Bonds Payable,a debit to Gain on Bond Retirement of $6,000,and a credit of $200,000 to Cash.
• C)$200,000 to Bonds Payable,a credit of $6,000 to Interest Expense,and a credit of $194,000 to Cash.
• D)$194,000 to Bonds Payable and a credit of $194,000 to Cash.

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