Question
On January 1, 2018, White, Inc. issues $1,000,000 total face value, 10-yr bonds with an annual stated interest rate of 5%. Interest is paid semi-annually
On January 1, 2018, White, Inc. issues $1,000,000 total face value, 10-yr bonds with an annual stated interest rate of 5%. Interest is paid semi-annually on June 30th and December 31st. The company received $559,260 upon issuance. (Solutions posted online)
| Period | Cash Paid | Interest Expense | Amortization of Discount/Premium | Unamortized Premium/Discount | Bonds Carrying Value (Book Value) |
| Issuance | Dont use | Dont use | Dont use |
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| 6/30/2018 |
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| 12/31/2018 |
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| 6/30/2019 |
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Are the bonds issued at a premium, a discount, or at face value? What is the (annual) market interest rate at the time of issue?
How much cash is paid to the bondholder on December 31, 2018?
How much Interest Expense would be recorded for 2018?
What would be the Carrying Value of the bonds at June 30, 2019?
On December 31, 2020, when the annual market rate of interest was 6%, White repurchased 10% of these bonds on the open market and retired the debt. What Gain or Loss would White record at that time?
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Financial Accounting
Authors: Jan R. Williams, Susan F. Haka, Mark S. Bettner, Joseph V. Carcello
12th Edition
0071116796, 978-0071116794
