On May 1,2013,Metro Company Has Bonds with Balances as Shown

question 72

Multiple Choice

On May 1,2013,Metro Company has bonds with balances as shown below. If Metro retires the bonds for $52,000,what will be the effect on the income statement?

• A) There will be a loss on retirement of $3,140.
• B) There will be a gain on retirement of $3,140.
• C) There will be sales revenue of $3,140.
• D) There will be no effect on net income.

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Definitions:

Par Value

This term denotes the officially stated value of a share of stock or bond, serving as a legal capital threshold that companies cannot issue stock below.

Current Market Value

The amount of money that could currently be received for selling an asset in the marketplace.

Par-value

The face value of a bond or the stated value of a stock, as defined in the corporate charter, which has little to do with its market value.

Yield To Maturity

The total return anticipated on a bond if it is held until its maturity date, taking into account its purchase price, interest payments, and terminal value.