On May 1, 2016, Hudson Theatres issued $600,000 of 25-year, 10 percent bonds payable. The bonds were

Question:

On May 1, 2016, Hudson Theatres issued $600,000 of 25-year, 10 percent bonds payable. The bonds were sold for $552,000. The bonds pay interest each October 31 and April 30, and any discount or premium is amortized using straight-line amortization.

Requirements

1. Fill in the blanks to complete these statements:

a. Hudson Theatres' bonds are priced at (express the price as a percentage) _______________.

b. When Hudson Theatres issued its bonds, the market interest rate was (higher than, lower than, or equal to) _______________ 10 percent.

c. The amount of bond discount or premium is _______________.

2. Record the following transactions:

a. Issuance of the bonds payable on May 1, 2016

b. Payment of interest (and amortization of discount or premium if any) on October 31, 2016

c. Accrual of interest (and amortization of discount or premium if any) on December 31, 2016; explanations are not required

3. At what amount will Hudson Theatres report the bonds on its balance sheet at December 31, 2016?

Balance Sheet
Balance 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...