**Johansen Company Bond Issuance Analysis**Johansen Company issued a bond at a discount. Which of the following shows how the issuance of the bonds affects the financial statements?**Balance Sheet and Income Statement Analysis:**| | Balance Sheet | Income Statement | Statement of Cash Flows ||---------------|----------------------------------|--------------------------------------|-------------------------|| | Assets = Liabilities + Equity | Revenue - Expense = Net Income | || **A.** | + + n/a | n/a + - | +OA || **B.** | + + n/a | n/a n/a n/a | +FA || **C.** | + + − | n/a + - | +FA || **D.** | + + n/a | n/a n/a n/a | +OA |**Explanation of Terms:**- **Assets, Liabilities, Equity:** Reflects the basic accounting equation (Assets = Liabilities + Equity).- **Revenue, Expense, Net Income:** Components of the income statement.- **Statement of Cash Flows:** Indicates cash flow impacts categorized under Operating Activities (OA) or Financing Activities (FA).**Multiple Choice Options:**- **Option D**- **Option C**- **Option A**- **Option B** This problem asks which option correctly reflects the financial statement impact of issuing a bond at a discount.

Increase in asset is debited while increase in liability is credited. Assets, liabilities and stockholders' equity are recorded in Balance Sheet. Income and expenses are recorded in the Income statement.Correct Option: Option B Assets = Liab + Equity Revenue - Expense = Net Inc Cash Flow B. + = + + NA NA - NA = NA +FA Explanation: Issuance of bonds at a discount is a financial activity. Issuance of bonds will bring cash and hence increase the asset. Bonds payable is a liability and the same will be increased.

Business

Accounting

Johansen Company issued a bond at a discount. Which of the following shows how the issuance of the bonds affects the financial statements? Balance Sheet A. B. C. D. Assets Liabilities + + Multiple Choice ο ο ο ο Option D Option C Option A Option B Stockholders' Equity n/a n/a - n/a Revenue n/a n/a n/a n/a Income Statement - Expense = Net Income Statement of Cash Flows + +OA +FA n/a + n/a n/a n/a +FA +0A

Johansen Company issued a bond at a discount. Which of the following shows how the issuance of the bonds affects the financial statements? Balance Sheet A. B. C. D. Assets Liabilities + + Multiple Choice ο ο ο ο Option D Option C Option A Option B Stockholders' Equity n/a n/a - n/a Revenue n/a n/a n/a n/a Income Statement - Expense = Net Income Statement of Cash Flows + +OA +FA n/a + n/a n/a n/a +FA +0A

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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