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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Fleeson Company needs additional funds to purchase equipment for a new production facility and is considering either issuing bonds payable or borrowing the money from a local bank, in the form of an installment note. How does an installment note differ from a bond payable?

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Installment note: It is a debt in which the borrower is required to pay equal periodic payments to the lender based on the term of the note.

To explain: How an installment note is differ from a bonds payable

Explanation

An installment note is a debt in which the borrower is required to pay equal periodic payments. In installment note, periodic payment consists partially the amount of interest and partially the amount of principal.

Bonds payable is a long-term debt in which the bondholders is required to ...

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