12. A company prepared the following journal entry Interest expense Discount on

Question

12. A company prepared the following journal entry Interest expense Discount on bonds payable Cash Which of the following statements correctly describes the effect of this journal entry on the financial statements? O The bonds payable book value increases by the amount of the credit to discount on bonds payable. The bonds payable book value decreases by the amount of the credit to cash. O The cash payment is reported as a cash flow from financing activities. Stockholders' equity decreases by the amount of the credit to cash.

Explanation / Answer

The bonds book value increase by the amount of the credit to discount on bonds payable

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