Question

Cabot Inc. has 6%, $100,000 face amount bonds outstanding. The bonds were issued at a discount. At end of the current fiscal period, unamortized bond discount is $1,200.The balance sheet presentation of Cabot's bonds should include:

Answer 1

Bonds payable of $100,000 and less discount on bonds payable of $1,200

Step-by-step explanation:

The total long term liability is always recorded at the amount actually payable which means the discounts receivable on paying off the bond will be netted off from the bonds.

The Bonds payable is $100,000 and the discount receivable on bonds payable is $1,200 so the net amount is $99,880.