Tableau DA 10-2: Exercise, Recording bond issuance and amortization LO P2 The founder of Frenza asks us to assist her in accounting and analysis of the corporation's bonds, which have an annual contract rate of 8%. She wants to know the business and accounting implications of further debt issuances as she looks for ways to finance the growth of Frenza. The following Tableau Dashboard is provided to help us address her questions and provide recommendations for her business decisions. Frenza Bond Amortization Carrying Value Unamortized Discount $100,000 $80,000 $60,000 $40,000 $20,000 so January 1, Year June 30, Year 1 December 31, June 30, Year 2 December 31, June 30, Year 3 December 31, Year 1 Year 2 Year 3 Cash & Inventory for Competing Companies Market Rate for Company Bonds Frenza Lika Nelo 10 (Frenza $50,000 8 Lika $40,000 49 $30,000 Nele 20 $20,000 096 $10,000 Total Equity & Net Income $0 Frenza Lika Nelo Cash Cash Net Income 5100,000 Cash Inventory $190.000 505,000 Inventory Inventory Total Equity $400,000 $530,000 $275,000 +ableau 98 1(a). Prepare journal entries to record the issuance of Frenza bonds on January 1, Year 1 1(b). Prepare journal entries to record the first and second interest payments on June 30, Year 1 and December 31 Year1 1(c). Prepare journal entries to record the maturity of the bonds on December 31, Year 3 2. Frenza needs to raise money to purchase new equipment. The founder is concerned about losing ownership control of her company. Which of the following ways to raise money would we recommend? 3. Frenza needs to raise money to purchase more inventory. The founder is concerned about the company's ability to make required cash payments when cash flows are low. Which of the following ways to raise money would we recommend? Required 1A Required 18 Required IC Required 2 Required Prepare journal entries to record the issuance of Frenza bonds on January 1, Year 1. View transaction list Journal entry worksheet Record the issuance of the bonds on January 1, Year 1. Note: Enter debits before credits Date General Journal Debit Credit Jan 01 Res entry Clear entry View general journal Required Required 18 > Required 1A Required 18 Required 10 Required 2 Required 3 Prepare journal entries to record the first and second interest payments on June 30, Year 1, and December 31, Year 1. View transaction list Journal entry worksheet Record the semiannual interest payment and amortization on June 30, Year 1. Note: Enter debits before credits Date General Journal Debit Credit Jun 30 Record entry Clear entry View general journal Required 1A Required 1B Required 10 Required 2 Required 3 Prepare journal entries to record the first and second interest payments on June 30, Year 1, and December 31, Year 1. View transaction list Journal entry worksheet Required 1A Required 1B Required 10 Required 2 Required 3 Prepare journal entries to record the maturity of the bonds on December 31, Year 3. View transaction list Journal entry worksheet
