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Unformatted text preview: Bond Premium and Discount Premium Issue price above face value Market rate of interest is less than stated rate of interest Discount Issue price below face value Market rate of interest is greater than stated rate of interest Market interest rate = rate investors demand for loaning money; changes frequently Stated interest rate = printed on the bond certificate; determines amount of cash interest; remains constant Account for bonds payable Issuing Bonds Payable at Face Value Suppose a company issues $100,000 of 8% bonds payable that mature in ten years; the bonds pay interest semi-annually...
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This note was uploaded on 06/15/2011 for the course ACCT 23020 taught by Professor Dorff,p during the Spring '08 term at Kent State.
- Spring '08
- Financial Accounting