Question
On January 2, 2017, $100,000 of 12%, 10-year bonds were issued for $98,300. The $1,700 discount was charged to Interest Expense. The bookkeeper, Mark Landis,
On January 2, 2017, $100,000 of 12%, 10-year bonds were issued for $98,300. The $1,700 discount was charged to Interest Expense. The bookkeeper, Mark Landis, records interest only on the interest payment dates of January 1 and July 1.
Instructions:
What is the effect on reported net income for 2017 of this error, assuming straight-line amortization of the discount?
What entry is necessary to correct for this error, assuming that the books are not closed for 2017?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Principles Of External Auditing
Authors: Brenda Porter, Jon Simon, David Hatherly
1st Edition
0471962120, 978-0471962120
