Question
Issuance of a Bond at Face Value On January 1, 2017, Whitefeather Industries issued 800, $1,000 face value bonds. The bonds have a(n) 10-year life
Issuance of a Bond at Face Value
On January 1, 2017, Whitefeather Industries issued 800, $1,000 face value bonds. The bonds have a(n) 10-year life and pay interest at the rate of 10%. Interest is paid semiannually on July 1 and January 1. The market rate of interest on January 1 was 10%. Use the present value tables that may be found by clicking on the present value table links above. Round your answer to the nearest dollar.
1. Calculate the issue price of the bonds and record the issuance of the bonds on January 1, 2017. Round your final answer to the nearest dollar.
$fill in the blank 3a8c7cffc013fd7_1
Identify and analyze the effect of the issuance of the bonds on January 1, 2017.
| Activity | |
| Accounts | |
| Statement(s) |
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | ||||||
| fill in the blank 4d6c93fb1fab03f_2 | fill in the blank 4d6c93fb1fab03f_4 | fill in the blank 4d6c93fb1fab03f_5 | fill in the blank 4d6c93fb1fab03f_7 | fill in the blank 4d6c93fb1fab03f_9 | fill in the blank 4d6c93fb1fab03f_10 | |||||||||
2. How would the issue price have been affected if the market rate of interest had been higher than 10%.
3. Identify and analyze the effect of the payment of interest on July 1, 2017.
| Activity | |
| Accounts | |
| Statement(s) |
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | ||||||
| fill in the blank cfeb70061f84f8f_2 | fill in the blank cfeb70061f84f8f_4 | fill in the blank cfeb70061f84f8f_5 | fill in the blank cfeb70061f84f8f_7 | fill in the blank cfeb70061f84f8f_9 | fill in the blank cfeb70061f84f8f_10 | |||||||||
4. Calculate the amount of interest accrued on December 31, 2017. If required, round your answer to the nearest dollar. $fill in the blank e2365a05ffaefa6_1
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Accounting An International Introduction
Authors: David Alexander, Prof Christopher Nobes, Chris W. Nobes
4th Edition
027372164X, 978-0273721642
