On January 1, 2013, Tiny Tim Industries Had Outstanding $1,000,000

question 149

Multiple Choice

On January 1, 2013, Tiny Tim Industries had outstanding $1,000,000 of 12% bonds with a carrying amount of $966,130. The indenture specified a call price of $981,000. The bonds were issued previously at a price to yield 14%. Tiny Tim called the bonds (retired them) on July 1, 2013. What is the amount of the loss on early extinguishment?

• A)$0.
• B)$6,932.
• C)$7,241.
• D)$7,629

---

Definitions:

Posting

The process of recording financial transactions in the ledger of an accounting system, an essential step in the accounting cycle.

Transaction

A business event or exchange between two or more parties that has a financial impact on the accounts of the entities involved.

Trial Balance

A bookkeeping report that lists the balances of all ledger accounts at a specific point in time, used to verify the mathematical accuracy of the accounts.

Trial Balance

An accounting report that lists the balances of all ledgers accounts to check the mathematical accuracy of the bookkeeping entries.