A Company Has Bonds Outstanding with a Par Value of $100,000

question 38

Multiple Choice

A company has bonds outstanding with a par value of $100,000. The unamortized premium on these bonds is $2,700. If the company retired these bonds at a call price of 99, the gain or loss on this retirement is:

• A) $1,000 gain.
• B) $1,000 loss.
• C) $2,700 loss.
• D) $2,700 gain.
• E) $3,700 gain.

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Definitions:

Postdated Check

A postdated check is a check written with a future date, indicating when it can be deposited or cashed.

Insufficient Funds

A situation where an account does not have enough money to cover a transaction, resulting in rejection or fees.

Dishonored Check

A check that a bank refuses to honor or pay because the account holder does not have sufficient funds.

Dishonor

The refusal or inability to fulfil an obligation, especially in relation to financial instruments like checks or promissory notes.