Use the Following to Answer Questions

question 120

Short Answer

Use the following to answer questions
The Gordon Corporation issued $70,000 of 6%,5-year bonds on January 1,2016 at 98.The interest payments are due on December 31 each year.Gordon uses the straight-line method of amortization.
-Which of the following answers shows the effect of the bond issuance on the financial statements?

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Definitions:

Simple Rate of Return

The percentage of annual incremental net operating income to the initial investment cost.

Cash Operating Costs

Expenses directly related to the production of goods or provision of services that must be paid in cash.

Annual Depreciation

The allocation of the cost of an asset over its useful life, recognized each year.

Scrap Now

The action of disposing of materials or products that are no longer useful or sellable immediately.