Question

The Viper retires a $49.4 million bond issue when the carrying value of the bonds is $53.1 million, but the market value of the bonds is $46.5 million. The entry to record the retirement will include: Multiple Choice A debit of $6.6 million to a loss account. No gain or loss on retirement. A credit to cash for $53.1 million. A credit of $6.6 million to a gain account.

Answer 1

A debit of $6.6 million to a loss account

Step-by-step explanation:

The entry to record the retirement Viper retires

Carrying value of the bonds $53.1 million

Less the market value of the bonds is $46.5 million

=$6.6 million loss

The answer is a debit of $6.6 million to a loss account because the carrying value of the bonds was $53.1 million while the market value of the bonds was $46.5 million which means we have to deduct the carrying value from the market value which gave us a loss of $6.6 million .