On July 1, 2014, Miniature Company has bonds with balances as shown below. If the company retires the bonds for $66,150, what will be the effect on the income statement?

Question

On July 1, 2014, Miniature Company has bonds with balances as shown below.  If the company retires the bonds for $66,150, what will be the effect on the income statement?

Quizplus · Accepted Answer

To determine the effect on the income statement, we need to compare the amount paid for retirement ($66,150) to the carrying value of the bonds ($64,050). 
$66,150 - $64,050 = $2,100 gain on retirement. 
Therefore, the correct answer is C, gain on retirement of $2,100.

On July 1, 2014, Miniature Company Has Bonds with Balances