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Jones Company issued bonds with a $200,000 face value on January 1,2016.The five-year term bonds were issued at 97 and had a 7 ½ % stated rate of interest that is payable in cash on December 31st of each year.Jones amortizes the bond discount using the straight-line method.Based on this information:
-The total amount of liabilities shown on Jones's December 31,2017 balance sheet would be:
A)$191,600.
B)$194,000.
C)$196,400.
D)$195,200.

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The bonds were issued at 97, meaning they were issued at a discount. The discount is $200,000 - ($200,000 * 0.97) = $6,000. Using the straight-line method, the annual amortization of the discount is $6,000 / 5 = $1,200. By December 31, 2017, two years of amortization would have occurred, totaling $2,400. The carrying amount of the bonds on the balance sheet would be $194,000 ($200,000 - $6,000 + $2,400).

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