[The Following Information Applies to the Questions Displayed Below

question 52

Multiple Choice

[The following information applies to the questions displayed below.]

On January 1 Year 1, Gordon Corporation issued bonds with a face value of $70,000, a stated rate of interest of 6%, and a 5-year term to maturity. The bonds were issued at 98. Interest is payable in cash on December 31 each year. Gordon uses the straight-line method to amortize bond discounts and premiums.

-On December 31,Year 5,Gordon Corporation makes the final entry to record interest and amortization.Immediately after that,Gordon pays off the bonds as scheduled.Which of the following shows the effect of the bond payoff on the elements of the financial statements?

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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