Marvin Company issues $125,000 of bonds at face value on January 1. The bonds carry a 6% annual stated rate of interest. Interest is payable in cash on December 31 of each year. Which of the following shows theeffect of the first interest payment on the financial statements?Balance SheetLiabilities +(7,500)n/a(7,500)n/aAssetsA. (7,500)B. (7,500)C. (7,500)D. (7,500)Multiple ChoiceOOOOOption DOption BOption COption AStockholders'Equityn/a(7,500)n/a(7,500)Revenuen/an/an/an/aIncome StatementExpense = Net Incomen/an/a7,500(7,500)n/an/a7,500(7,500)Statement of Cash Flows(7,500) FA(7,500) FA(7,500) OA(7,500) OA

ANSWER:- (1) Option D (7,500)=NA+(7,500) NA-7,500=(7,500) (7,500)OA is correct Explanation:- Amount…

Marvin Company issues $125,000 of bonds at face value on January 1. The bonds carry a 6% annual stated rate of interest. Interest is payable in cash on December 31 of each year. Which of the following shows the effect of the first interest payment on the financial statements? Balance Sheet Liabilities + (7,500) Assets A. (7,500) B. (7,500) C. (7,500) D. (7,500) Multiple Choice O OOO n/a (7,500) n/a Option D Option B Option C Option A Stockholders' Equity n/a (7,500) n/a (7,500) Revenue n/a n/a n/a n/a Income Statement - Expense = Net Income n/a 7,500 n/a 7,500 n/a (7,500) n/a (7,500) Statement of Cash Flows (7,500) FA (7,500) FA (7,500) OA (7,500) OA

Marvin Company issues $125,000 of bonds at face value on January 1. The bonds carry a 6% annual stated rate of interest. Interest is payable in cash on December 31 of each year. Which of the following shows the effect of the first interest payment on the financial statements? Balance Sheet Liabilities + (7,500) Assets A. (7,500) B. (7,500) C. (7,500) D. (7,500) Multiple Choice O OOO n/a (7,500) n/a Option D Option B Option C Option A Stockholders' Equity n/a (7,500) n/a (7,500) Revenue n/a n/a n/a n/a Income Statement - Expense = Net Income n/a 7,500 n/a 7,500 n/a (7,500) n/a (7,500) Statement of Cash Flows (7,500) FA (7,500) FA (7,500) OA (7,500) OA

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 15MCQ

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