Johnson Company issued a $10,000 face value bond on January 1, Year 1 at 96. The...
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Johnson Company issued a $10,000 face value bond on January 1, Year 1 at 96. The five-year term bond had a 7% stated rate of interest that is payable in cash on December 31st of each year. The market rate at the time of issue was 8%. Johnson uses the effective interest rate method to account for bonds. Based on this information alone, the amount. of total liabilities (bond carrying value) shown on Johnson's December 31, Year 3 balance sheet would be closest to: A. $10,000. B. $9,820. C. $9,600. D. $9,742. Johnson Company issued a $10,000 face value bond on January 1, Year 1 at 96. The five-year term bond had a 7% stated rate of interest that is payable in cash on December 31st of each year. The market rate at the time of issue was 8%. Johnson uses the effective interest rate method to account for bonds. Based on this information alone, the amount. of total liabilities (bond carrying value) shown on Johnson's December 31, Year 3 balance sheet would be closest to: A. $10,000. B. $9,820. C. $9,600. D. $9,742.
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Related Book For
Fundamental financial accounting concepts
ISBN: 978-0078025365
8th edition
Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward
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