Consider a firm that recently issued bonds.Further, consider that the firm also set up a bond sinking fund.
Required:
a. Why would a firm create a long-term liability?
b. Why would a firm set up a bond sinking fund?
c. If a firm paid $10,000 into its bond sinking fund at the end of the year, how would this transaction be journalized?

Question

Consider a firm that recently issued bonds.Further, consider that the firm also set up a bond sinking fund.
Required:
 a.	Why would a firm create a long-term liability?
b.	Why would a firm set up a bond sinking fund?
c.	If a firm paid $10,000 into its bond sinking fund at the end of the year, how would this transaction be journalized?

Quizplus · Accepted Answer

The Answer of Consider a firm that recently issued bonds.Further, consider that the firm also set up a bond sinking fund.
Required:
 a.	Why would a firm create a long-term liability?
b.	Why would a firm set up a bond sinking fund?
c.	If a firm paid $10,000 into its bond sinking fund at the end of the year, how would this transaction be journalized?

Consider a Firm That Recently Issued Bonds