Required: Using the indicated letters, identify the net effects of the following transactions or conditions on...

 

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Required: Using the indicated letters, identify the net effects of the following transactions or conditions on the various financial statement components: |= Increase D= Decrease NE = No effect Transaction Assets Liabilities Equity Note payable issued for cash Note payable issued for property Note payable issued for expenses (to pay salaries, rent, etc.) Bond issue costs - at issuance of the bond Bond issue costs - amortization Bond issued at a discount Payment of interest - not previously accrued (the bond was issued at par on January 1 and pays interest annually on December 31) Required: Answer the following questions. 1. Why would a note payable be issued at a discount? 2. How are the costs of issuing a bond accounted for? 3. Provide one reason why a borrower might wish to retire debt obligations before their maturity dates. 4. What is off-balance-sheet financing? Why might a company be interested in this type of financing? Required: Using the indicated letters, identify the net effects of the following transactions or conditions on the various financial statement components: |= Increase D= Decrease NE = No effect Transaction Assets Liabilities Equity Note payable issued for cash Note payable issued for property Note payable issued for expenses (to pay salaries, rent, etc.) Bond issue costs - at issuance of the bond Bond issue costs - amortization Bond issued at a discount Payment of interest - not previously accrued (the bond was issued at par on January 1 and pays interest annually on December 31) Required: Answer the following questions. 1. Why would a note payable be issued at a discount? 2. How are the costs of issuing a bond accounted for? 3. Provide one reason why a borrower might wish to retire debt obligations before their maturity dates. 4. What is off-balance-sheet financing? Why might a company be interested in this type of financing?

Answer rating: 100% (QA)

ANSWER 1 because the stated rate of interest the borrower is paying less than the rate that borrower ... View the full answer