Homework Answers
Answer 1 is A.
Platte Corporation issued 5-year note payable for $5,000
Increase in Cash (Assets) = $5,000
Increase in Note Payable (Liability) = $5,000
Borrowing cash through issue of note payable is financing
activity.
So, Presentation of above transaction in financial statement is best described by option A.
Answer 2 is B.
Increase in Cash = $196,000 ($200,000 * 98%)
Increase in Discount on Bonds Payable = $4,000 ($200,000 *
2%)
Increase in Bonds Payable = $200,000
Increase in discount on bonds payable shows that bonds are issued at a discount of 2%
So, Bonds are issued at 98
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