On January 1, Year 1, Big Seats Furniture, Inc., issued $200,000 worth of 8% bonds at $200,000. Interest will be paid annually on December 31. Show the effect of the first interest payment on the accounting equation. What is liability?

A. (16,000) Cash
B. (8,000) Interest Payable
C. 0 No Effect
D. 16,000 Interest Income
E. 16,000 Cash
F. (16,000) Interest Expense
G. 216,000 Bonds Payable
H. 200,000 Bonds Income

Ans: C. 0 No Effect

Business

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