1. Auerbach Inc. issued 4% bonds on October 1, 2016. The bonds have a maturity date of September 30, 2026 and a face value of $300 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2017. The effective interest rate established by the market was 6%.

Assuming that Auerbach issued the bonds for $255,369,000, what would the company report for its net bond liability balance at December 31, 2016, rounded up to the nearest thousand?

a. $252,369,000. b. $256,369,000.

c. $256,200,000. d. $257,030,070.

2. Auerbach Inc. issued 4% bonds on October 1, 2016. The bonds have a maturity date of September 30, 2026 and a face value of $300 million. The bonds pay interest each March 31 and September 30, beginning March 31, 2017. The effective interest rate established by the market was 6%.

Assuming that Auerbach issued the bonds for $255,369,000, what would the company report for its net bond liability balance after its first interest payment on March 31, 2017, rounded up to the nearest thousand?

a. $252,369,000. b. $256,369,000.

c. $256,300,000. d. $257,030,000.

On January 1, 2018, Kohl Corporation issued $700,000, 8%, 10-year bonds at face value. Interest is payable semiannually on July 1 and January 1. Kohl Corporation has a calendar year end.

Instructions

Prepare entries relating to:

1. January 1, 2018 (2 marks)
2. June 30, 2018 (2 marks)
3. July 1, 2018 (2 marks)
4. December 31, 2018. (2 marks)