On October 15,2013,Rural Sales Has a Bond with Balances as Shown

question 90

Multiple Choice

On October 15,2013,Rural Sales has a bond with balances as shown below. If Rural Sales wishes to retire the bonds for $82,000,what will be the effect on the income statement?

• A) Gain on retirement of $2,600
• B) Loss on retirement of $2,600
• C) Gain on retirement of $2,000
• D) Loss on retirement of $2,000

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Definitions:

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity which funds its overall operations and growth.

EPS

Earnings per share, a key indicator of a company's profitability, calculated as the company's net profit divided by the number of its outstanding shares.

DFL

Degree of Financial Leverage; a measure that shows how much a company's earnings per share (EPS) are affected by changes in its operating income, indicating the volatility of earnings.

Dividends Per Share

The amount of dividends paid to shareholders, divided by the number of outstanding shares of a company's stock.