On December 31,2013,Peterson Sales Has a Bonds Payable Balance of $40,000

question 132

Multiple Choice

On December 31,2013,Peterson Sales has a bonds payable balance of $40,000 and a premium on bonds payable of $900.On the balance sheet,how will this information be shown?

• A) $40,000 less premium of $900 for a net balance of $39,100
• B) $40,000 less one-tenth of $900 for a net balance of $39,910
• C) $40,000 only
• D) $40,000 plus a premium of $900 for a net balance of $40,900

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Definitions:

Drawer

The party that writes an order or the person who writes a check.

Accommodation Party

A party who signs an instrument to provide credit for another party who has also signed the instrument.

Credit

The granting of a loan and the creation of debt; any form of deferred payment, or the ability of an individual or company to borrow money with the promise to repay it at a later date.

Commercially Reasonable

Actions that a prudent person would reasonably take under comparable circumstances, particularly in business transactions.