A company prepared the following journal entry: Bonds payable
Premium on bonds payable
Loss on bond retirement
$ \quad $Cash Which of the following statements is correct?
A)The book value of the bonds was less than the cash payment.
B)The increase in stockholders' equity equals the loss on the bond retirement.
C)The decrease in assets is greater than the decrease in liabilities, therefore stockholders' equity decreases.
D)The net cash flow from financing activities decreases by the bonds payable book value.

Question

A company prepared the following journal entry: Bonds payable
Premium on bonds payable 
Loss on bond retirement 
$ \quad $Cash Which of the following statements is correct?
A)The book value of the bonds was less than the cash payment.
B)The increase in stockholders' equity equals the loss on the bond retirement.
C)The decrease in assets is greater than the decrease in liabilities, therefore stockholders' equity decreases.
D)The net cash flow from financing activities decreases by the bonds payable book value.

Quizplus · Accepted Answer

The journal entry indicates that the company paid more cash than the book value of the bonds, resulting in a loss. This means the decrease in assets (cash) is greater than the decrease in liabilities (bonds payable), leading to a decrease in stockholders' equity.

A Company Prepared the Following Journal Entry: Bonds Payable Premium \quad

A Company Prepared the Following Journal Entry: Bonds Payable
Premium $\quad$