Bonds Payable Memo

Bonds Payable Memo - To Pioneer Company From Ryan...

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To: Pioneer Company From: Ryan Brandenburg Date: February 11, 2008 Subject: Bond Amortization Schedules Bonds are debt securities that the public can purchase from our company. These bondholders will receive an interest payment of a set rate, known as the coupon rate, as each set period of time elapses. Bonds can be sold at a premium, meaning the bonds going to be sold at a higher price, or a discount, meaning the opposite. When bonds are selling at a premium the market rate, or effective rate, is lower than the coupon rate. When bonds are selling at a discount the market rate is higher than the coupon rate. This difference in selling price and face value of the bonds must be amortized over the periods where the bonds are outstanding. Amortization can be done either of two ways: straight-line or using the effective interest rate method. When the bonds reach their maturity date our company will pay back the face value of the bond to the bondholder. I have determined, as was asked of me, the selling price of the bonds, and the amount of
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Bonds Payable Memo - To Pioneer Company From Ryan...

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