CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

BB Corporation's trial balance included the following account balances on December 31, 2015:

Accounts payable: $90,000
Bonds payable, due 2016: $150,000
Discount on bonds payable: $18,000
Dividends payable: $48,000
Notes payable, due 2019: $120,000

What amount should be included in the current liability section of the balance sheet?
A. $270,000
B. $306,000
C. $390,000
Explanation: All items due in the next 12 months should be included (accounts payable plus, bonds due 2016, less related discount, plus dividends payable).

User Contributed Comments 7

User Comment
Allen88 Does anyone understand why discounts payable is subtracted from current liability?
zeiad because it is (discount )
dmfcrowe yes but bonds repay at par so the liability will not be discounted at the time its repaid so the amount to be paid will be the par value. I see where your coming from Allen88, In saying that though 270 was the one I went with.
viruss Discount or Premium are amortized
Junichi how about notes payable?
houstcarr seems like $288k is the right answer. the discount would just be amortized and has no effect on actual cash payed.
ecapocas It's subtracted.

In this case "bonds payable" refers to the face value and the "discount" is the remaining amortization allowance.
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