SEMINARUNIT8PP[1] - Accounting II Unit 8 Bonds Payable and...

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Accounting II Unit 8 – Bonds Payable and Investments in Bonds
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Financing Corporations A bond is simply a form of an interest-bearing note. Like a note, a bond requires periodic interest payments, and the face amount must be repaid at the maturity date.
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Bonds Payable A corporation that issues bonds enters into a contract (called a bond indenture or trust indenture ) with the bondholders . Usually, the face value of each bond, called the principal , is $1,000 or a multiple of $1,000. Interest on bonds may be payable annually, semiannually, or quarterly. Most pay interest semiannually.
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When all bonds of an issue mature at the same time, they are called term bonds . If the maturity dates are spread over several dates, they are called serial bonds . Bonds that may be exchanged for other securities are called convertible bonds .
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Bonds that a corporation reserves the right to redeem before their maturity are called callable bonds .
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Pricing of Bonds Payable
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