On January 1,2010,Jacob Issues $800,000 of 9%,13-Year Bonds at a Price

question 157

Multiple Choice

On January 1,2010,Jacob issues $800,000 of 9%,13-year bonds at a price of 96½.Six years later,on January 1,2016,Jacob retires 20% of these bonds by buying them on the open market at 105½.All interest is accounted for and paid through December 31,2015,the day before the purchase.The straight-line method is used to amortize any bond discount. What is the journal entry to record the retirement of 20% of the bonds on January 1,2016?

• A)
• \[\begin{array} { |l | r | r | }
• \hline \text { Bonds Payable } & 160,000 & \\
• \hline \text { Cash } & & 156,985 \\
• \hline \text { Discount on Bonds Payable } & & 3,015 \\
• \hline
• \end{array}\]
• B)
• \[\begin{array} { | l | r | r | }
• \hline \text { Bonds Payable } & 160,000 & \\
• \hline \text { Loss on Retirement } & 11,815 & \\
• \hline \text { Discount on Bonds Payable } & & 3,015 \\
• \hline \text { Cash } & & 168,800 \\
• \hline
• \end{array}\]
• C)
• \[\begin{array} { | l | r | r | }
• \hline \text { Bonds Payable } & 160,000 & \\
• \hline \text { Discount on Bonds Payable } & 3,015 & \\
• \hline \text { Cash } & & 168,800 \\
• \hline \text { Gain on Retirement } & & 5,785 \\
• \hline
• \end{array}\]
• D)
• \[\begin{array} { | l | r | r | }
• \hline \text { Bonds Payable } & 160,000 & \\
• \hline \text { Premium on Bonds Payable } & 2,585 & \\
• \hline \text { Discount on Bonds Payable } & & 3,015 \\
• \hline \text { Cash } & & 154,400 \\
• \hline
• \end{array}\]
• E)
• \[\begin{array} { | c | r | r | }
• \hline \text { Bonds Payable } & 168,800 & \\
• \hline \text { Cash } & & 168,800 \\
• \hline
• \end{array}\]

Distinguish between managing for ethical pursuits versus managing for profits.

Discern the complexity of ethical decision-making in the business context.

Acknowledge the significance of aligning organizational value systems with employee values.

Grasp the impact of cultural and media influences on moral boundaries and character formation.

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Definitions:

Bottleneck Process

A bottleneck process is a stage in production that reduces the efficiency of the operation due to limited capacity, slowing down the overall process flow and impacting productivity.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to related products and services.

Factory Overhead

Costs associated with manufacturing operations that are not directly tied to specific units of production, such as utilities and rent for the manufacturing space.

Activity Rates

Charges or costs assigned to specific activities or cost drivers in activity-based costing, used to allocate overhead.