On January 1 Year 1, Gordon Corporation issued bonds with a face value of $70,000, a stated rate of interest of 6%, and a 5-year term to maturity. The bonds were issued at 98. Interest is payable in cash on December 31 each year. Gordon uses the straight-line method to amortize bond discounts and premiums. Which of the following shows the effect of the first interest payment and amortization of the premium or discount on the financial statements? Income Statement Assets A. (4,200) B. (4,480) C. (4,480) D. (4,200) Balance Sheet Liabilities + (4,200) (280) (280) 280 Stockholders' Equity n/a (4,200) (4,200) (4,480) Revenue n/a n/a n/a n/a Expense n/a 4,200 4,200 4,480 Net Income n/a (4,200) (4,200) (4,480) Statement of Cash Flows (4,200) FA (4,480) FA (4,200) OA/(280) FA (4,200) OA

On January 1 Year 1, Gordon Corporation issued bonds with a face value of $70,000, a stated rate of interest of 6%, and a 5-year term to maturity. The bonds were issued at 98. Interest is payable in cash on December 31 each year. Gordon uses the straight-line method to amortize bond discounts and premiums. Which of the following shows the effect of the first interest payment and amortization of the premium or discount on the financial statements? Income Statement Assets A. (4,200) B. (4,480) C. (4,480) D. (4,200) Balance Sheet Liabilities + (4,200) (280) (280) 280 Stockholders' Equity n/a (4,200) (4,200) (4,480) Revenue n/a n/a n/a n/a Expense n/a 4,200 4,200 4,480 Net Income n/a (4,200) (4,200) (4,480) Statement of Cash Flows (4,200) FA (4,480) FA (4,200) OA/(280) FA (4,200) OA

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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