If there is a loss on bonds redeemed early, it is
A)debited directly to Retained Earnings.
B)reported as "Other Expenses and Losses" on the income statement.
C)reported as part of profit from operations on the income statement.
D)debited to Interest Expense, as a cost of financing.

Question

Quizplus · Accepted Answer

When bonds are redeemed early and there is a loss, it is reported as "Other Expenses and Losses" on the income statement. This is because the loss is not related to the company's regular operations, but rather a result of a specific event (early redemption of the bonds). It is not debited to Retained Earnings, as this is a reserve account that reflects the cumulative profits of the company. It is also not debited to Interest Expense, as interest expense reflects the cost of borrowing money in general, not specifically for the redemption of bonds.

If There Is a Loss on Bonds Redeemed Early, It