Handy Corp B) C) D)

question 148

Multiple Choice

Handy Corp. retired bonds payable with a carrying value of $980,000. What effect does this transaction have on total assets and shareholders' equity?

• A) \[\begin{array} { | l | l | }
• \hline \text { Total Assets } & \text { Shareholders' Equity } \\
• \hline \text { Decrease by } \$ 980,000 & \text { No effect }
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline \text { Total Assets } & \text { Shareholders' Equity } \\
• \hline \text { Decrease by } \$ 980,000 & \text { Increase by } \$ 980,000
• \end{array}\]
• C) \[\begin{array} { | l | l | }
• \text { Total Assets } & \text { Shareholders' Equity } \\
• \text { Increase by } \$ 980,000 & \text { Increase by } \$ 980,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | }
• \hline \text { Total Assets } & \text { Shareholders' Equity } \\
• \hline \text { Increase by } \$ 980,000 & \text { Decrease by } \$ 980,000 \\
• \hline
• \end{array}\]

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Definitions:

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