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In: Accounting

The December 31, 2016, statement of financial position of Cotton Corporation includes the following: 9% bonds...

  1. The December 31, 2016, statement of financial position of Cotton Corporation includes the following:

9% bonds payable due December 31, 2025     $718,900

The bonds have a face value of $700,000 and were issues on December 31, 2015, at 103, with interest payable on July 1 and December 31 of each year. Cotton uses straight-line amortization to amortize bond premiums or discount. On March 1, 2017, Cotton retired $280,000 of these bonds at 98 plus accrued interest. Ignoring income taxes, what should cotton record as a gain on retirement bonds?

  1. $7,560
  2. $13,020
  3. $13,160
  4. $14,000
  1. Direct incremental costs incurred to sell shares, such as underwriting costs, should be accounted for as:
  1. a reduction of share capital
  2. an expense of the period in which the shares are issued
  3. an intangible asset
  4. a reduction of retained earnings

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ekkarill92 answered 6 months ago
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