A $300,000 Bond Issue with a Carrying Value of $311,000

question 82

Multiple Choice

A $300,000 bond issue with a carrying value of $311,000 is called at 103 and retired.The entry to record the retirement of bonds would be:

• A) Bonds Payable 309,000
• Cash 309,000
• B) Bonds Payable 311,000
• Cash 311,000
• C) Cash 300,000
• Bonds Payable 300,000
• D) Bonds Payable 300,000
• Unamortized Bond Premium 11,000
• Cash 309,000
• Gain on Retirement of Bonds 2,000

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Definitions:

Secondary Market

The financial market where investors purchase and sell securities they already own, as opposed to the primary market where securities are first issued.

Firms

Firms are business organizations engaged in commercial, industrial, or professional activities, typically comprised of a partnership or a corporation.

Primary Market

The financial market for new securities issues where corporations sell new stocks and bonds to the public for the first time.

Equity Offering

The issuance of new shares by a company to the public or to institutional investors to raise capital.