Hooper Corporation Has Bonds Outstanding with a Face Value of $100,000

question 26

Multiple Choice

Hooper Corporation has bonds outstanding with a face value of $100,000 and a carrying value of $103,000 on December 31,2013.If the company calls in and retires these bonds on December 31,2013,for $105,000,the entry to record the retirement would be:

• A) Bonds Payable 103,000
• Cash 103,000
• B) Bonds Payable 105,000
• Cash 105,000
• C) Bonds Payable 100,000
• Loss on Retirement of Bonds 3,000
• Cash 103,000
• D) Bonds Payable 100,000
• Loss on Retirement of Bonds 2,000
• Unamortized Bond Premium 3,000
• Cash 105,000

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Definitions:

Rate of Total Return

The percentage gain or loss on an investment over a specified period, considering both price appreciation and dividends or interest.

Compounded Quarterly

A method of calculating interest in which the interest is added to the principal amount every three months, then interest is calculated on the new total.

Principal Earning

The portion of an investment's return that is generated from the original amount invested, excluding any interest earned.

Six Years

A period of time equal to six times the length of one calendar year.