The Viper retires a $40 million bond issue when the carrying value of the bonds is $42 million, but the market value of the bonds is $36 million. The entry to record the retirement will include:
A) A credit of $6 million to a gain account.
B) A debit of $6 million to a loss account.
C) No gain or loss on retirement.
D) A credit to cash for $42 million.
Answer: A
The Raptor retires a $20 million bond issue when the carrying value of the bonds is $18 million, but the market value of the bonds is $15 million. The entry to record the retirement will include:
A) A debit of $3 million to a loss account.
B) A credit of $3 million to a gain account.
C) No gain or loss on retirement.
D) A credit to cash for $18 million.
Answer: B
The Titan retires a $20 million bond issue when the carrying value of the bonds is $18 million, but the market value of the bonds is $23 million. The entry to record the retirement will include:
A) A debit of $5 million to a loss account.
B) A credit of $5 million to a gain account.
C) No gain or loss on retirement.
D) A credit to cash for $18 million.
Answer: A
