Because Interest Rates Have Fallen, a Company Retires Bonds Which

Multiple Choice

Because interest rates have fallen, a company retires bonds which had been issued at their face value of $200,000. The company bought the bonds back at 97. This retirement would be recorded with a:

A) debit of $200,000 to Bonds Payable, a credit of $6,000 to Gain on Bonds Retired, and a credit of $194,000 to Cash.
B) debit of $200,000 to Bonds Payable and a credit of $200,000 to Cash.
C) debit of $200,000 to Bonds Payable, a credit of $6,000 to Interest Expense, and a credit of $194,000 to Cash.
D) debit of $194,000 to Bonds Payable and a credit of $194,000 to Cash.