On May 1,2013,Metro Company has bonds with balances as shown below. If Metro retires the bonds for $52,000,what will be the effect on the income statement?
A) There will be a loss on retirement of $3,140.
B) There will be a gain on retirement of $3,140.
C) There will be sales revenue of $3,140.
D) There will be no effect on net income.

Question

On May 1,2013,Metro Company has bonds with balances as shown below.  If Metro retires the bonds for $52,000,what will be the effect on the income statement?
A) There will be a loss on retirement of $3,140. 
B) There will be a gain on retirement of $3,140. 
C) There will be sales revenue of $3,140. 
D) There will be no effect on net income.

Quizplus · Accepted Answer

A) Calculation: $52,000 + $1,140 - $50,000 = $3,140

On May 1,2013,Metro Company Has Bonds with Balances as Shown