Question

The following items are found in the financial statements.

Answer 1

Answer:

(a) Discount on bonds payable  ⇒ SHOULD BE REPORTED IN THE BALANCE SHEET UNDER LIABILITIES

(b) Interest expense (credit balance)  ⇒ WHEN INTEREST EXPENSE IS INCLUDED IN THE INCOME STATEMENT IT HAS A DEBIT BALANCE, WHEN IT HAS A CREDIT BALANCE IT MEANS IT IS A LIABILITY AND MUST BE REPORTED IN THE BALANCE SHEET

(c) Unamortized bond issue costs  ⇒ SHOULD BE REPORTED IN THE BALANCE SHEET, IT IS A CONTRA LIABILITY ACCOUNT

(d) Gain on repurchase of debt  ⇒ SHOULD BE REPORTED IN THE INCOME STATEMENT AS PART OF OTHER GAINS AND LOSSES

(e) Mortgage payable (payable in equal amounts over next 3 years)  ⇒ SHOULD BE REPORTED IN THE BALANCE SHEET UNDER LIABILITIES (UNDER CURRENT AND LONG TERM LIABILITIES)

(f) Debenture bonds payable (maturing in 5 years) ⇒ SHOULD BE REPORTED IN THE BALANCE SHEET UNDER LONG TERM LIABILITIES

(g) Notes payable (due in 4 years)  ⇒ SHOULD BE REPORTED IN THE BALANCE SHEET UNDER LONG TERM LIABILITIES

(h) Premium on bonds payable   ⇒ SHOULD BE REPORTED IN THE BALANCE SHEET UNDER LIABILITIES (REDUCES BONDS PAYABLE)

(i) Bonds payable (due in 3 years) ⇒ SHOULD BE REPORTED IN THE BALANCE SHEET UNDER LONG TERM LIABILITIES