Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In the 2013 third quarter, we issued $350 million aggregate principal amount of 3.4 percent Series M Notes due 2020 (the Series M Notes). We

In the 2013 third quarter, we issued $350 million aggregate principal amount of 3.4 percent Series M Notes due 2020 (the Series M Notes). We received net proceeds of approximately $345 million from the offering, after deducting the underwriting discount and estimated expenses. We pay interest on the Series M Notes on April 15 and October 15 of each year, commencing on April 15, 2014.

These Series M Notes are described as: Series M Notes, interest rate of 3.4%, face amount of $350, maturing October 15, 2020 (effective interest rate of 3.6%)

(a) What journal entry would have been recorded in the third quarter of 2013 to record the issuance of the Series M Notes?

(b) Record the interest payment and interest expense on April 15 and October 15, 2014. Assume the effective interest method, and record your responses to the nearest thousand dollars.

April 15:

October 15:

(c) Assume that, at the end of 2014, the prevailing market rate for interest obligations similar to these notes was 4.0%. What would be the approximate net carrying or book value of the notes at the year end? Explain.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Glomont Auditing And Attestation AICPA Released Questions CPA Exam Review 2022

Authors: Glomont, American Institute Of Certified Public Accountants, AICPA

1st Edition

B0BF31GQMC, 979-8353524045

More Books

Students also viewed these Accounting questions

Question

Design a health and safety policy.

Answered: 1 week ago