Each year, Pacific Enterprises (PE) prepares a reconciliation schedule that compares its income statement with its statement of cash flows . In its 2018 income statement, PE reported $11,000 of interest expense on its outstanding bonds. During the year, PE paid its regular installments of $9,000 of interest in cash. In its reconciliation schedule, PE should: Show a $2,000 positive adjustment to net income under the indirect method for the decrease in bond discount Show a $2,000 positive adjustment to net income under the indirect method for the decrease in bond premium Show a $2,000 negative adjustment to net income under the indirect method for the decrease in bond discount Show a $2,000 negative adjustment to net income under the indirect method for the decrease in bond premium

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Each year, Pacific Enterprises (PE) prepares a reconciliation
schedule that compares its income statement with its statement of
cash flows . In its 2018 income statement, PE reported $11,000 of
interest expense on its outstanding bonds.
During the year, PE paid its regular installments of $9,000 of
interest in cash. In its reconciliation schedule, PE should:
Show a $2,000 positive adjustment to net income under the indirect
method for the decrease in bond discount
Show a $2,000 positive adjustment to net income under the indirect
method for the decrease in bond premium
Show a $2,000 negative adjustment to net income under the indirect
method for the decrease in bond discount
Show a $2,000 negative adjustment to net income under the indirect
method for the decrease in bond premium
Transcribed Image Text:Each year, Pacific Enterprises (PE) prepares a reconciliation schedule that compares its income statement with its statement of cash flows . In its 2018 income statement, PE reported $11,000 of interest expense on its outstanding bonds. During the year, PE paid its regular installments of $9,000 of interest in cash. In its reconciliation schedule, PE should: Show a $2,000 positive adjustment to net income under the indirect method for the decrease in bond discount Show a $2,000 positive adjustment to net income under the indirect method for the decrease in bond premium Show a $2,000 negative adjustment to net income under the indirect method for the decrease in bond discount Show a $2,000 negative adjustment to net income under the indirect method for the decrease in bond premium
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