On July 1, 2017, Immediately After Recording Interest Payments, Salsa

question 112

Multiple Choice

On July 1, 2017, immediately after recording interest payments, Salsa, Inc. retired one fifth of its $500,000 of bonds payable for $97,500. The bonds were originally issued at par value in 2012. Which of the following statements is correct?

• A)Stockholders' equity is not affected by the bond retirement.
• B)A gain of $2,500 will be reported on the income statement.
• C)A loss of $2,500 will be reported on the income statement.
• D)A gain of $402,500 will be reported on the income statement.