On January 1, 2014, Collins Copy Machine Company issued thirty $1,000 face-value bonds with a stated annual
Question:
On January 1, 2014, Collins Copy Machine Company issued thirty $1,000 face-value bonds with a stated annual rate of 10 percent that mature in ten years. Interest is paid semiannually on June 30 and December 31. The bonds were issued at face value.
a. Prepare the entry to record the issuance of these bonds on January 1, 2014.
b. Prepare all the entries associated with these bonds during 2014 (excluding the entry to record the issuance).
c. Compute the balance sheet value of the bond liability as of December 31, 2014.
d. Compute the present value of the bond’s remaining cash flows as of December 31, 2014, using the effective rate at issuance.
e. Repeat (c) and (d) as of December 31, 2015, and explain the relationship between the balance sheet value and the present value.
Balance SheetBalance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
a 1114 Cash A 30000 Bonds Payable L 30000 Issued bonds for cash b 63014 Interest Expense E SE 1500 a ...View the full answer
