On January 1, Year 1, Pierce Corporation issued $25,000 in 8%, 5-year bonds payable at 102. Interest payments are due each December 31. Pierce uses the straight-line method to amortize bond discounts and premiums.Which of the following shows the effect of the bond issuance on January 1, Year 1?| Balance Sheet | Income Statement | Statement of Cash Flows ||------------------------------|----------------------------|-------------------------|| Assets | Liabilities + Stockholders’ Equity | Revenue - Expense = Net Income | || A. 25,500 | 25,500 | n/a | n/a | n/a | n/a | 25,500 FA || B. 25,500 | 25,500 | n/a | n/a | n/a | n/a | 25,500 OA || C. 25,500 | 24,500 | 500 | 500 | n/a | 500 | 25,500 OA || D. 25,500 | 24,500 | 500 | 500 | n/a | 500 | 25,500 FA |Multiple Choice- Option C- Option D- Option A- Option BExplanation:The table provides balance sheet data, income statement data, and the effect on the statement of cash flows for different options labeled A to D. The balance sheet shows variations in how the bond issuance affects assets, liabilities, and stockholders’ equity. The income statement outlines if any revenue, expense, or net income impacts are recorded. The cash flow statement section indicates the type of cash flow activity: FA (financing activity) or OA (operating activity).

Bonds are the securities which are issued by the entity in order to raise funds. It is an obligation…

On January 1, Year 1, Pierce Corporation issued $25,000 in 8%, 5-year bonds payable at 102. Interest payments are due each December 31. Pierce uses the straight-line method to amortize bond discounts and premiums. Which of the following shows the effect of the bond issuance on January 1, Year 1? Assets 25,500 A. B. 25,500 C. 25,500 D. 25,500 Multiple Choice OOOO Balance Sheet = Liabilities + 25,500 25,500 24,500 24,500 Option C Option D Option A Option B Stockholders' Equity n/a n/a 500 500 Revenue n/a n/a 500 500 Income Statement Expense n/a n/a n/a n/a = Net Income n/a n/a 500 500 Statement of Cash Flows 25,500 FA 25,500 OA 25,500 OA 25,500 FA

On January 1, Year 1, Pierce Corporation issued $25,000 in 8%, 5-year bonds payable at 102. Interest payments are due each December 31. Pierce uses the straight-line method to amortize bond discounts and premiums. Which of the following shows the effect of the bond issuance on January 1, Year 1? Assets 25,500 A. B. 25,500 C. 25,500 D. 25,500 Multiple Choice OOOO Balance Sheet = Liabilities + 25,500 25,500 24,500 24,500 Option C Option D Option A Option B Stockholders' Equity n/a n/a 500 500 Revenue n/a n/a 500 500 Income Statement Expense n/a n/a n/a n/a = Net Income n/a n/a 500 500 Statement of Cash Flows 25,500 FA 25,500 OA 25,500 OA 25,500 FA

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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