In 2005,ABC Company issued $100,000 of 20-year bonds at face value.Ten years later,in 2015,the company retired the bonds early by purchasing them in the open market at $101,000.The entry to record this transaction includes a:
A) credit to Gain on Bond Retirement of $1,000.
B) debit to Loss on Bond Retirement of $1,000.
C) debit to Bonds Payable of $101,000.
D) credit to Cash of $100,000.

Question

Quizplus · Accepted Answer

The company paid $101,000 to retire bonds with a face value of $100,000, resulting in a loss of $1,000. Therefore, a debit to Loss on Bond Retirement of $1,000 is recorded.

In 2005,ABC Company Issued $100,000 of 20-Year Bonds at Face