Question
On December 31, 2020, Rosco Corporation issued $60,000 in bonds which mature in 5 years. The bonds coupon rate is 12% and interest is paid
On December 31, 2020, Rosco Corporation issued $60,000 in bonds which mature in 5 years. The bonds coupon rate is 12% and interest is paid semiannually. The market rate at the date of the issue for similar bonds was 10%. SHOW HOW YOU ARRIVED AT THE ANSWERS
A) At what price should this bond sell at the issue date? (How much cash should Rosco receive?
- Create a table showing the amortization of the premium or discount for the first two payment dates of the bonds.
| Date | Cash Interest Payment | Interest Expense | Discount/Premium Amortization | Discount/Premium Balance | Bond Carrying (Book) Value |
| December 31, 2020 (Issue Date) |
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| Interest Payment June 30, 2021 |
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| Interest Payment December 31, 2021 |
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- At what value will the bond be reported on the balance sheet at 6/30/2021?
- What interest expense will be reported for the year ending 12/31/2021?
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Financial Accounting Preparing Financial Statements AAT Level 3 FIVE AAT Practice Assessments
Authors: MarZar Ltd
1st Edition
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