Cansat, a Crown corporation owned by the government, issued bonds to finance the construction of the next
Question:
Cansat, a Crown corporation owned by the government, issued bonds to finance the construction of the next generation of observation satellites. On January 1, 2020, Cansat issued 7%, 15-year bonds with a face value of $200 million. The bonds will pay interest semi-annually on June 30 and December 31.
Required
a. Calculate the amount of cash Cansat will receive if the bonds are sold under each of the following bond alternatives:
i. 7% (issued at par)
ii. a price of 95.542 to yield 7.5%
iii. a premium in the amount of $9,500,000 and first interest payment of $6,808,750
b. Prepare the journal entry Cansat would record at the time of the issuance of the bonds under each of the alternatives.
c. Prepare the journal entries to record the first interest expense for the alternatives (i), (ii), and (iii) above.
CorporationA Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...
Step by Step Answer:
Understanding Financial Accounting
ISBN: 9781119406921
2nd Canadian Edition
Authors: Christopher D. Burnley