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I have the answer to the following Becker question. I was wondering if someone could explain to me why the discount on bonds payable is subtracted.
Gar, Inc.’s trial balance reflected the following liability account balances at December 31, year 1:
Accounts payable $19000
Bonds payable due year 2 34000
Deferred income tax liability 4000
Discount on bonds payable 2000
Dividends payable on 2/15/Y2 5000
Income tax payable 9000
Notes payable due 1/19/Y3 6000
The deferred income tax liability is based on temporary differences stemming from different depreciation methods for financial reporting and income taxes. In Gar’s December 31, year 1, balance sheet, the total current liabilities was:
answer: $65,000 (19+34-2+5+9)
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