@pracap I imagine you would use the premium-BIC to amortize since that is what you do for discount and they shouldn't be treated differently unless specifically stated somewhere. (so the amort is the difference between the 800k * coupon and the 825.5k * mkt)
Also I don't understand the solution to the following question:
Clark Co.'s advertising expense account had a balance of $146,000 at December 31, Year 1, before any necessary year-end adjustment relating to the following:
– Included in the $146,000 is the $15,000 cost of printing catalogs for a sales promotional campaign in January Year 2.
– Radio advertisements broadcast during December Year 1 were billed to Clark on January 2, Year 2. Clark paid the $9,000 invoice on January 11, Year 2.
What amount should Clark report as advertising expense in its income statement for the year ended December 31, Year 1?
a.
$122,000
b.
$131,000
c.
$155,000
d.
$140,000
The answer is d. I picked 131,000 because I just subtracted the 15000 and didn't add ad exp. for the radio broadcast since it was only billed in Jan of next year. Is it because I have to set up the expense and payable accounts immediately? Seems like a dumb question, but it would just help if someone could confirm.
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