Talia59
Aug 6, 2012, 12:42 PM
On January 1, 2005, Jon Sports has a bond payable of $200,000. During 2005, it pays off
$20,000 of the outstanding bond principal and issues a new $70,000 bond. There are no
Other transactions related to the bond payable account.
What is Jon Sports' December 31, 2005 bond payable balance?
A. A credit balance of $150,000
B. A credit balance of $250,000
C. A debit balance of $250,000
D. A debit balance of $150,000
***My Answer: B because the new accounts payable balance after Jon Sports pays off 20,000 of principle is $180,000. If they then issue $70k in new bonds you would add that too the current bond payable balance to yield $250k. That increase in the bond payable section is a credit because an increase in acounts/bond payables is a credit. Is this correct logic?
$20,000 of the outstanding bond principal and issues a new $70,000 bond. There are no
Other transactions related to the bond payable account.
What is Jon Sports' December 31, 2005 bond payable balance?
A. A credit balance of $150,000
B. A credit balance of $250,000
C. A debit balance of $250,000
D. A debit balance of $150,000
***My Answer: B because the new accounts payable balance after Jon Sports pays off 20,000 of principle is $180,000. If they then issue $70k in new bonds you would add that too the current bond payable balance to yield $250k. That increase in the bond payable section is a credit because an increase in acounts/bond payables is a credit. Is this correct logic?