Question
A company issued $625,000 of 7%, 15-year bonds at 103 on July 1, 2018. Interest is payable semiannually on December 31 and June 30. On
A company issued $625,000 of 7%, 15-year bonds at 103 on July 1, 2018. Interest is payable semiannually on December 31 and June 30. On July 1, 2023, the company retired the bonds at 97.
| 1. Was this bond issued at a discount or a premium? What does that mean? Why would this bond have been issued at a discount or premium? | |||||||
| 2. For the company in this example, use the financial statement effects template discussed in class to record: | |||||||
| a. | The bond issuance on July 1, 2018 | ||||||
| b. | The first coupon payment on December 31, 2018 | ||||||
| c. | The retirment of the bond on July 1, 2023 (HINT: 10 periods have elapsed) |
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1 This bond was issued at a premium That means it was issued at a price hig...
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Intermediate Accounting Reporting and Analysis
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
2nd edition
9781305727557, 1285453824, 9781337116619, 130572755X, 978-1285453828
