Mandel Corp. retired bonds payable with a carrying value of $980,000. What effect does this transaction have on these accounts?

Question

Quizplus · Accepted Answer

The retirement of bonds payable, which means the company has paid off its debt, will decrease the bonds payable account and the corresponding credit entry will be made to the cash account. This transaction will have no effect on the carrying value of the bonds payable. Therefore, option B - decrease in bonds payable and decrease in cash - is the correct choice.