Description
1. In your own words, detail out the primary differences between "bonds payable" and "notes payable"?
2. What conditions must be present for bonds to be issued at a discount?
3. What is meant by the terminology 'carrying value of bonds'?
4. Newman Production Services signed an 12%, 10 year note for $170,000. The company pays $2,700 per month as a fixed installment payment. How much interest expense would be recorded at the time of the second monthly installment payment?
Explanation & Answer
Attached.
Running Head: ACCOUNTING
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Accounting
Institution Affiliation
Date:
ACCOUNTING
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1.
Notes payable and bonds payable are two distinct methods that businesses utilize to
borrow money in the form of loans. The two differ in the manner in which borrowing agreements
are made. The notes payable, for instance, are accounts representing the long-term liabilities of
business (Madura, 2012). The liabilities are in the form of loans that are taken by the business to
fund its development and in times of financial problems. On the other hand, bonds payable are
long-te...
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