1. Carr Corporation retires its $500,000 face value bonds at 105 on January 1, following the payment of interest. The carrying value of the bonds at the redemption date Is $518,725. The entry to record the redemption will include a

A) Credit of $18,725 to Loss on Bond Redemption.

B) Debit of $18,725 to Premium or Bonds Payable.

C) Credit of $6,275 to Gain on Bond Redemption

D) Debit of $25,000 to Premium on Bonds Payable.

2. When a corporation sells treasury stock below its cost, it usually debits the difference between cost and selling price to Paid-in Capital from Treasury Stock.

A) True

B) False

3. Direct costs incurred to sell stock such as underwriting costs should be accounted for as

1. A reduction of additional paid-in capital.

2. An expense of the period in which the stock is issued.

3. An intangible asset.

A) 1

B) 2

C) 3

D) 1 or 3

Answer rating: 100% (QA)

1 B Debit of 18725 to premium on Bonds Payable Usually entries would be as follows Accounts D... View the full answer