Question
On February? 28, 2016?, Dolphin Corp. issues 6?%, 10?-year bonds payable with a face value of =$900,000. The bonds pay interest on February 28 and
On February? 28,
2016?,
Dolphin
Corp. issues
6?%,
10?-year
bonds payable with a face value of
=$900,000.
The bonds pay interest on February 28 and August 31.
DolphinDolphin
Corp. amortizes bond discount by the? straight-line method.
| 1. | If the market interest rate is 5?% whenDolphinDolphin Corp. issues its? bonds, will the bonds be priced at?par, at a? premium, or at a? discount? Explain. | |
| 2. | If the market interest rate is 7?% whenDolphinDolphin Corp. issues its? bonds, will the bonds be priced at?par, at a? premium, or at a? discount? Explain. | |
| 3. | Assume that the issue price of the bonds is 93. Journalize the following bonds payable transactions. | |
| a. | Issuance of the bonds on February? 28, 2016. | |
| b. | Payment of interest and amortization of the bond discount on August? 31, 2016. | |
| c. | Accrual of interest and amortization of the bond discount on December? 31, 2016?, the? year-end. | |
| d. | Payment of interest and amortization of the bond discount on February? 28, 2017. | |
| 4. | Report interest payable and bonds payable as they would appear on the Dolphin Corp. balance sheet at December? 31,2016. | |
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
Internal Auditing An Integrated Approach
Authors: Richard E. Cascarino
2nd Edition
0702172693, 978-0702172694
