Question
The Gordon Corporation issued $70,000 of 6%, 5-year bonds on January 1, Year 1 at 98. The interest payments are due on December 31 each
The Gordon Corporation issued $70,000 of 6%, 5-year bonds on January 1, Year 1 at 98. The interest payments are due on December 31 each year. Gordon uses the straight-line method of amortization.
Which of the following answers shows the effect of the bond issuance on the financial statements?
| Assets | = | Liab. | + | Equity | Rev. | Exp. | = | Net Inc. | Cash flow | ||
| A. | 70,000 | = | 70,000 | + | NA | NA | NA | = | NA | 70,000 FA | |
| B. | 68,600 | = | 68,600 | + | NA | NA | NA | = | NA | 68,600 FA | |
| C. | 68,600 | = | 70,000 | + | (1,400) | NA | 1,400 | = | (1,400) | 68,600 FA | |
| D. | 70,000 | = | 68,600 | + | 1,400 | NA | (1,400) | = | 1,400 | 70,000 FA |
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The Only Tax Audit Guide Youll Ever Need
Authors: Janet M. Sydlaske, Richard K. Millcroft
1st Edition
0471510769, 978-0471510765
