On January 2, 2017, $100,000 of 11%, 10-year bonds wereissued for $97,000. The $3,000 discount was charged toInterest Expense. The bookkeeper, Mark Landis, recordsinterest only on the interest payment dates of January 1and July 1. What is the effect on reported net income for2017 of this error, assuming straight-line amortization ofthe discount? What entry is necessary to correct for thiserror, assuming that the books are not closed for 2017?
On January 2, 2017, $100,000 of 11%, 10-year bonds wereissued for $97,000. The $3,000 discount was charged toInterest Expense. The bookkeeper, Mark Landis, recordsinterest only on the interest payment dates of January 1and July 1. What is the effect on reported net income for2017 of this error, assuming straight-line amortization ofthe discount? What entry is necessary to correct for thiserror, assuming that the books are not closed for 2017?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 2, 2017, $100,000 of 11%, 10-year bonds were
issued for $97,000. The $3,000 discount was charged to
Interest Expense. The bookkeeper, Mark Landis, records
interest only on the interest payment dates of January 1
and July 1. What is the effect on reported net income for
2017 of this error, assuming straight-line amortization of
the discount? What entry is necessary to correct for this
error, assuming that the books are not closed for 2017?
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