Liab. + Equity Rev. − Exp. = Net Inc. A. NA = NA
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, Year 1, Residence Company issued bonds with a $50,000 face value. The bonds were issued at face value. They had a 20 year term and a stated rate of interest of 7%. Which of the following shows how the payoff of the bond liability will affect Residence’s financial statements on December 31, Year 20 (the maturity date)?
| Income Statement | Statement of Cash Flows | ||||||||||
| Assets | = | Liab. | + | Equity | Rev. | − | Exp. | = | Net Inc. | ||
| A. | NA | = | NA | + | NA | NA | − | NA | = | NA | (50,000) IA |
| B. | NA | = | NA | + | NA | NA | − | NA | = | NA | (50,000) FA |
| C. | 50,000 | = | 50,000 | + | NA | NA | − | NA | = | NA | 50,000 IA |
| D. | (50,000) | = | (50,000) | + | NA | NA | − | NA | = | NA | (50,000) FA |
Transcribed Image Text:On January 1, Year 1, Residence Company issued bonds with a $50,000 face value. The bonds were issued at face value. They had a 20 year term and a stated rate of interest of 7%. Which of the
following shows how the payoff of the bond liability will affect Residence's financial statements on December 31, Year 20 (the maturity date)?
Balance Sheet
Income Statement
Statement of
Assets
Liab.
Equity
Rev.
Exp.
Net Inc.
Cash Flows
+
=
A.
(50,000) IA
(50,000) FA
NA
NA
+
NA
NA
NA
=
NA
=
В.
NA
NA
NA
NA
NA
NA
%3D
C.
50, 000
=| 50,000
NA
|NA
NA
NA
50,000 IA
+
(50,000) = |(50,000) +
NA
(50,000) FA
D.
NA
NA
NA
Transcribed Image Text:Multiple Cholce
Option A
Option B
Option C
Option D
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