Pate Company was started when it issued bonds with a $400,000 face value on January 1, 2013.

Question:

Pate Company was started when it issued bonds with a $400,000 face value on January 1, 2013. The bonds were issued for cash at 96. They had a 20-year term to maturity and an 8 percent annual interest rate. Interest was payable on December 31 of each year. Pate Company immediately purchased land with the proceeds (cash received) from the bond issue. Pate leased the land for $50,000 cash per year. On January 1, 2016, the company sold the land for $400,000 cash. Immediately after the sale of the land, Pate redeemed the bonds at 98. Assume that no other accounting events occurred during 2016.

Required

Prepare an income statement, statement of changes in equity, balance sheet, and statement of cash flows for the 2013, 2014, 2015, and 2016 accounting periods. Assume that the company closes its books on December 31 of each year. Prepare the statements using a vertical statements format.

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... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Answer rating: 83% (12 reviews)

Transactions 1 Issued bonds at 96 Cash proceeds 384000 Discount 16000 1113 2 Purchased land for 384000 1113 3 Land rental 50000 per year for 2013 2014 2015 4 Interest payments per year 400000 x 8 3200...View the full answer

Answered By

Nicholas Maina

Throughout my tutoring journey, I've amassed a wealth of hands-on experience and honed a diverse set of skills that enable me to guide students towards mastering complex subjects. My proficiency as a tutor rests on several key pillars: 1. Subject Mastery: With a comprehensive understanding of a wide range of subjects spanning mathematics, science, humanities, and more, I can adeptly explain intricate concepts and break them down into digestible chunks. My proficiency extends to offering real-world applications, ensuring students grasp the practical relevance of their studies. 2. Individualized Guidance: Recognizing that every student learns differently, I tailor my approach to accommodate various learning styles and paces. Through personalized interactions, I identify a student's strengths and areas for improvement, allowing me to craft targeted lessons that foster a deeper understanding of the material. 3. Problem-Solving Facilitation: I excel in guiding students through problem-solving processes and encouraging critical thinking and analytical skills. By walking learners through step-by-step solutions and addressing their questions in a coherent manner, I empower them to approach challenges with confidence. 4. Effective Communication: My tutoring proficiency is founded on clear and concise communication. I have the ability to convey complex ideas in an accessible manner, fostering a strong student-tutor rapport that encourages open dialogue and fruitful discussions. 5. Adaptability and Patience: Tutoring is a dynamic process, and I have cultivated adaptability and patience to cater to evolving learning needs. I remain patient through difficulties, adjusting my teaching methods as necessary to ensure that students overcome obstacles and achieve their goals. 6. Interactive Learning: Interactive learning lies at the heart of my approach. By engaging students in discussions, brainstorming sessions, and interactive exercises, I foster a stimulating learning environment that encourages active participation and long-term retention. 7. Continuous Improvement: My dedication to being an effective tutor is a journey of continuous improvement. I regularly seek feedback and stay updated on educational methodologies, integrating new insights to refine my tutoring techniques and provide an even more enriching learning experience. In essence, my hands-on experience as a tutor equips me with the tools to facilitate comprehensive understanding, critical thinking, and academic success. I am committed to helping students realize their full potential and fostering a passion for lifelong learning.

4.90+ 5+ Reviews 16+ Question Solved

Related Book For book-img-for-question

Fundamental financial accounting concepts

ISBN: 978-0078025365

8th edition

Authors: Thomas P. Edmonds, Frances M. Mcnair, Philip R. Olds, Edward

See More Books

Question Posted: Oct 26, 2013 07:19 AM

See More Questions

Pate Company was started when it issued bonds with a $400,000 face value on January 1, 2013.

Question:

Step by Step Answer:

Transactions 1 Issued bonds at 96 Cash proceeds 384000 Discount 16000 1113 2 Purchased land for 384000 1113 3 Land rental 50000 per year for 2013 2014 2015 4 Interest payments per year 400000 x 8 3200...View the full answer

Fundamental financial accounting concepts

Students also viewed these Accounting questions