Question
On February? 28,2016 Phy shy Corp. issues 10?%, 5?-year bonds payable with a face value of $ 2,100,000. The bonds pay interest on February 28
On February? 28,2016 Phy shy Corp. issues 10?%, 5?-year bonds payable with a face value of $ 2,100,000. The bonds pay interest on February 28 and August 31. Physhy Corp. amortizes bond discount by the? straight-line method.
If the market interest rate is 9?% when Physhy Corp. issues its? bonds, will the bonds be priced at? par, at a? premium, or at a? discount? Explain.
REQUIREMENTS:
| 1. | If the market interest rate is 9?% when Physhy 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 11?% when Physhy 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 94. 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 Physhy Corp. balance sheet at December? 31,2016. | |
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Standard For Auditing Computer Applications
Authors: Martin A. Krist
2nd Edition
0849399831, 978-0849399831
