Question

Which of the following statementis) isjare correct regarding retining of bonds? Seioct cnet a. The debit to bonds payable and the credt to discount en bonds payable are to remove both items from the balance sheot.

b. The lows is reported on the income statement under other income and expenses:
c. If the cash paid is less than the bond's book value, a gain is recorded.
d. All at the arailable choices:

Answer 1

The correct statements about the retirement of bonds are that the debit to bonds payable and the credit to discount on bonds payable remove these items from the balance sheet, and if cash paid is less than the bond's book value, a gain is recorded and reported in the income statement under other income and expenses.

Step-by-step explanation:

The retirement of bonds involves certain accounting entries to remove the bonds and associated accounts from the balance sheet. When bonds are retired, the debit to bonds payable and the credit to discount on bonds payable are accounting transactions used to remove the liability and the contra-liability from the balance sheet. If a bond is retired at an amount less than its book value, the difference is recorded as a gain. This gain is usually reported as an item in the other income and expenses section of the income statement.