Date

Transaction

Balance Sheet

Income Statement

Cash Flow

Assets

L

SE

Cash

AR

Inventory

Accts Pay

Bonds Payable

Cont. Cap

RE

Sales Rev

COGS

Other Revenue or Exp

Note Re: Rev and Exp

Net Income Impact

Category O I F

1/1/17

6/30/17

12/31/2017

Requirement 1:

Consider the following bond details below and answer the questions. Use the included Financial Statement Impact template to make accounting entries requested in the questions below. On January 1, 2017 Pioneer Co. issued $550,000 of 5 year 12% bonds for $592,468 yielding a market rate of 10%. Interest is payable semiannually on June 30 and December 31.

a) Confirm the bond issuance price and show your work.

b) Why are two different present value tables used to price the bond?

c) Is this bond issuing at a discount, premium or par? Explain your answer.

d) Create your own amortization table. The table should show the carrying value at January 1 as the first row. Include 2 full years of interest payments. Refer to the videos and text for amortization table examples.

e) Record the following entries on the included Financial Statement Impact Template. a. Jan 1, 2017 bond issuance b. June 30, 2017 interest payment c. Dec 31, 2017 interest payment f) This company chose to issue a bond as means to raise capital. Identify two reasons a company may choose this type of financing.