The founder of Frenza asks us to assist her in accounting and analysis of the corporations 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 88000 90oon Carrying Value Unamortized Discount $100,000 192000 940n %ood op hoovao $80,000 $ 60,000 $40,000 $20,000 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 Frenza Lika Nelo Market Rate for company Bonds 55000 $50,000 42000 $40,000 Buooo) $30,000 132000 18000 $20,000 $10,000 7000 Total Equity & Net Income Frenza Lika Nelo - Cash Cash Cash Net Income $100,000 $190,000 inventory $85,000 nventory nventory Total.Equity.......$400,000..........$530,990............$27.5.000... 1. What is the premium or discount on the Frenza bonds on the issue date of January 1, Year 1? 2. Prepare the journal entry for issuance of the Frenza bonds on January 1, Year 1. Required 1 Required 2 What is the premium or discount on the Frenza bonds on the issue date of January 1, Year 1? Amount Premium or discount? What is the premium or discount on the Frenza bonds on the issue date of January 1, Year 1? 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 Record entry Clear entry View general journal 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, Year 1. 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? Journal entry worksheet Record the issuance of the bonds on January 1, Year 1. Note: Enter debits before credits. General Journal Debit Credit Date Jan 01 Record entry Clear entry View general journal Journal entry worksheet Record the semiannual interest payment and amortization on June 30, Year 1. Note: Enter debits before credits General Journal Debit Credit Date Jun 30 Record entry Clear entry View general journal Journal entry worksheet Required 1A Required 1B Required 1C Required 2 Required 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? (Select all that apply.) Issue bonds Issue a note to a bank Issue common stock Issue preferred stock Frenza Bond Amortization 88000 90oon Carrying Value Unamortized Discount $100,000 192000 940n %ood op hoovao $80,000 $ 60,000 $40,000 $20,000 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 Frenza Lika Nelo Market Rate for company Bonds 55000 $50,000 42000 $40,000 Buooo) $30,000 132000 18000 $20,000 $10,000 7000 Total Equity & Net Income Frenza Lika Nelo - Cash Cash Cash Net Income $100,000 $190,000 inventory $85,000 nventory nventory Total.Equity.......$400,000..........$530,990............$27.5.000... 1. What is the premium or discount on the Frenza bonds on the issue date of January 1, Year 1? 2. Prepare the journal entry for issuance of the Frenza bonds on January 1, Year 1. Required 1 Required 2 What is the premium or discount on the Frenza bonds on the issue date of January 1, Year 1? Amount Premium or discount? What is the premium or discount on the Frenza bonds on the issue date of January 1, Year 1? 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 Record entry Clear entry View general journal 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, Year 1. 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? Journal entry worksheet Record the issuance of the bonds on January 1, Year 1. Note: Enter debits before credits. General Journal Debit Credit Date Jan 01 Record entry Clear entry View general journal Journal entry worksheet Record the semiannual interest payment and amortization on June 30, Year 1. Note: Enter debits before credits General Journal Debit Credit Date Jun 30 Record entry Clear entry View general journal Journal entry worksheet Required 1A Required 1B Required 1C Required 2 Required 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? (Select all that apply.) Issue bonds Issue a note to a bank Issue common stock Issue preferred stock
