Question
On January 1, 2018, Amazon issued $750,000 of an 8% bond due in four years with interest payable annually at year-end. The current market rate
On January 1, 2018, Amazon issued $750,000 of an 8% bond due in four years with interest payable annually at year-end. The current market rate for the interest of bonds of similar risk is 3.63%. The bond sold at 116.
a) What is the issue price?
b) What does the issue price mean?
c) Was this bond sold at a discount or premium? How much did the bond sell for?
d) Using the effective interest method, what will the payment schedule look like?
e) What will the liabilities section of the balance sheet look like for 1/1/2018, 1/1/2019, and 1/1/2022?
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Financial Accounting
Authors: David Spiceland, Wayne Thomas, Don Herrmann
4th edition
1259307956, 978-1259307959
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