Chapter 8
Non-Current Liabilities
429
Required
a) In January 2015, an auditor found errors relating to the bond transactions from 2013 and
2014. What adjustment is required to correct those errors, and what is the correct balance
on the discount on bonds account?
Date
A
Cash Payment
B
Interest
Expense
C
Reduction of
Principal
D
Principal
Balance
b) Calculate the value of the new bond issued on December 1, 2016 to replace the bond
issued in 2013. The new three-year $1,000,000 bonds pay 4% interest annually. The current
market rate is 2%.
