As a result of a drop in interest rates,a company retires bonds which had been issued at their face value of $200,000.The company bought the bonds back at 97.This retirement would be recorded with a:
A)debit of $200,000 to Bonds Payable,a credit of $6,000 to Gain on Bonds Retired,and a credit of $194,000 to Cash.
B)debit of $200,000 to Bonds Payable and a credit of $200,000 to Cash.
C)debit of $200,000 to Bonds Payable,a credit of $6,000 to Interest Expense,and a credit of $194,000 to Cash.
D)debit of $194,000 to Bonds Payable and a credit of $194,000 to Cash.

Question

Quizplus · Accepted Answer

Since the bonds were issued at face value,there is no discount or premium and the carrying value of the bonds is the face value,$200,000.

As a Result of a Drop in Interest Rates,a Company