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On January 1, MJKB Incorporated exercises a call option that requires MJKB to pay $315,000 for its outstanding bonds that have a carrying value of
On January 1, MJKB Incorporated exercises a call option that requires MJKB to pay $315,000 for its outstanding bonds that have a carrying value of $319,000 and a par value of $310,000. The company exercises the call option after the semiannual interest payment was made the day before (December 31). The entry to retire the bonds does not include which of the following? Multiple Choice Debit to Bonds Payable $315,000. Debit to Premium on Bonds Payable $9,000. Credit to Gain on Retirement of Bonds of $4,000. Credit to Cash of $315,000. Debit to Bonds Payable $310,000. A disadvantage of bond financing versus equity financing is that bonds require payment of both periodic interest and the par value at maturity, while equity does not require payments. True or False True False
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