[The following information applies to the questions displayed below.]On January 1 Year 1, Gordon Corporation issued bonds with a face value of $70,000, a stated rate of interest of 6%, and a 5-year term to maturity. The bonds were issued at 98. Interest is payable in cash on December 31 each year. Gordon uses the straight-line method to amortize bond discounts and premiums.Which of the following shows the effect of the bond issuance on the elements of the financial statements? Assets=Liab.+Stk.EquityRev.?Exp.=Net Inc.Stmt. ofCash FlowsA.70,000=70,000+NANA?NA=NA70,000FAB.68,600=68,600+NANA?NA=NA68,600FAC.68,600=70,000+(1,400)NA?1,400=(1,400)68,600FAD.70,000=68,600+1,400NA?(1,400)=1,40070,000FA
A. Option A
B. Option B
C. Option C
D. Option D
Answer: B
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