On June 30,2016,K Co

question 70

Multiple Choice

On June 30,2016,K Co.had outstanding 9%,$10,000,000 face value bonds maturing on June 30,2021.Interest is payable semiannually every June 30 and December 31.On June 30,2016,after amortization was recorded for the period,the unamortized bond premium and bond issue costs were $60,000 and $100,000,respectively.On that date,K acquired all its outstanding bonds on the open market at 98 and retired them.At June 30,2016,what amount should K Co.recognize as gain on redemption of bonds before income taxes?

• A)$ 40,000.
• B)$160,000.
• C)$240,000.
• D)$360,000.

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Definitions:

FIFO Method

Stands for First In, First Out, an accounting method for valuing inventory where the oldest items in stock are sold or used first.

Ending Inventory

The final amount of products on hand at the close of an accounting period, reflecting the inventory that was not sold.

Tennis Rackets

Equipment used in the sport of tennis, consisting of a handle attached to a framed grid of tightly pulled strings.

Inventory Record

An inventory record is a detailed log that tracks the quantities and locations of products or materials a company has in stock.