Jacobs Company issued bonds with a $300,000 face value on January 1, Year 1. The bonds were issued at 102 and carried a 5-year term to maturity. They had a 9% stated rate of interest that was payable in cash on December 31st of each year. Jacobs uses the straight-line method to amortize bond discounts and premiums. Based on this information alone, how does the recognition of interest expense during Year 1 affect the company's accounting equation?
A. Increase liabilities by $1,200, decrease assets by $25,800, and decrease equity by $27,000
B. Decrease both assets and stockholders' equity by $2,700
C. Decrease equity by $25,800, decrease liabilities by $1,200, and decrease assets by $27,000
D. Decrease both assets and stockholders' equity by $25,800
Answer: C
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Identify the social costs of increased automobile ownership. Describe two options for restoring the balance between private and public goods. Give specific examples
What will be an ideal response?
The cash account in the company's ledger is a(n)
A) asset with a debit balance B) asset with a credit balance C) liability with a debit balance D) liability with a credit balance
Stricker Company sold equipment for $4,000. This resulted in a $1,500 loss. What is the impact of this sale on the balance sheet?
A) Reduces total assets B) Increases total assets C) Has no effect on total assets D) Increases total assets and decreases total equity
Alberta Simpson purchased a home in a gated community with a swimming pool. Because of the loss of her job, Alberta was unable to make her payments. Unable to sell the home, Alberta walked away from the home and her mortgage. The bank has taken over possession of the home. However, the bank has not arranged for maintenance of the property. The swimming pool has become a breeding ground for
mosquitoes and the county has had to post a warning notice on the front door for the neighbors to stay away from the property because of the risk for contracting the Nile virus from the mosquitoes. Which of the following statements is correct? A) The bank is not liable for the damages caused by the pool and mosquitoes. B) Alberta is not liable for the damages caused by the pool and mosquitoes if she has signed over title to the bank. C) The problem of the mosquitoes does not rise to the level of being a nuisance. D) There is not a remedy for nuisances on private property.