A company has a bond issue with a face value of $200,000 and a carrying amount of $195,500. The bond is acquired and retired at 98 1/2. What is the amount of gain or loss on this retirement?

Question 25 options:

	The company has a gain of $1,500.
	The company has a loss of $1,500.
	The company has a loss of $3,000.
	The company has a gain of $3,000.
	none of the above.

A corporation has $300,000 of bonds payable with a current carrying amount of $306,850. The stated rate is 10% and the effective rate of interest is 9%. The effective interest method of amortization is used and interest is paid semiannually. Which of the following amounts will be credit to cash in next entry to record payment of interest?

Question 12 options:

	Cash will be credited for $15,000.
	Cash will be credited for $13,500.
	Cash will be credited for $16,192.
	Cash will be credited for $13,808.
	none of the above.

Which of the following would be a reason that the stockholders of a company would issue bonds rather than stock to finance expansion?

Question 11 options:

	The value of their stock will inevitably decrease.
	Leveraged debt is always more advantageous than additional stock.
	Additional shares of stock might decrease earnings per share.
	Dividends must be paid each year even if the company is not profitable.