Bluestone Company Issued Bonds with a Face Value of $500,000

question 27

Multiple Choice

Bluestone Company issued bonds with a face value of $500,000 on January 1, Year 1 at 90. How would this event affect the company's financial statements?

• A) Increase assets (cash) by $450,000, decrease liabilities (discounts on bonds payable) by $50,000, and increase liabilities by $500,000.
• B) Increase assets (cash) by $500,000, decrease liabilities (discounts on bonds payable) by $50,000, and increase liabilities by $550,000.
• C) Increase assets (cash) by $450,000, decrease liabilities (premium on bonds payable) by $50,000, and increase liabilities by $500,000.
• D) Increase assets (cash) by $500,000 and increase liabilities by $500,000.

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Definitions:

Intangible Nature

The aspect of something that cannot be touched or physically measured, often related to abstract qualities like culture or knowledge.

Legal Work

Professional tasks and activities carried out in the context of practicing law, including research, litigation, and legal advice.

Political Corruption

The abuse of power by government officials for private gain, which can undermine democracy, economic development, and the rule of law.

White-collar

Relating to the class of jobs that typically involve mental or clerical work as opposed to manual labor.