Bonds with a Face Amount $1,000,000 Are Sold at 106

question 135

Multiple Choice

Bonds with a face amount $1,000,000 are sold at 106. The journal entry to record the issuance is

• A) Cash 1,000,000
• Premium on Bonds Payable Bonds Payable
• 60,000
• 1,060,000
• B) Cash Premium on Bonds Payable
• 1,060,000
• 60,000
• Bonds Payable
• 1,000,000
• C) Cash Discount on Bonds Payable
• 1,060,000
• 60,000
• Bonds Payable
• 1,000,000
• D) Cash Bonds Payable
• 1,060,000
• 1,060,000

Calculate the net working capital requirements for new projects.

Apply the tax shield approach to calculate operating cash flow.

Prepare and interpret pro forma financial statements to estimate future financial performance.

Understand the impact of taxation and depreciation on project and equipment valuation and decision-making.

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Definitions:

Net Loss

The result when a company's total expenses exceed its total revenues during a specific period, indicating a financial loss.

Worksheet

A paper or electronic document used to organize and simplify accounting information before the preparation of financial statements.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns to ensure that a company's bookkeeping system is mathematically correct.

Straight-Line Depreciation

A technique for distributing the expense of a physical asset across its lifespan in consistent yearly increments.