Demo_For_Chapter_10 - Demo Problem for Chapter...

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Demo Problem for Chapter 10 (Accounting for Bonds Payable) Demo Problem #1 To raise funds to build a new plant, Reed Company's management  issued bonds. The bond indenture specified the following: Par value of the bonds: $100,000. Date of issue: February 1, 2003; due in 10 years on January 31,  2013. Interest rate: 12 percent per annum, payable 6 percent on each  July 31 and January 31. All the bonds were sold on February 1, 2003, at 106. The annual  accounting period for Reed Company ends on December 31. Requirement 1: How much cash did Reed Company receive from the sale of the bonds  payable?  Sale price of the bonds $ 106,000 Requirement 2: What was the amount of premium on the bonds payable? Over how many  months should it be amortized?  Premium on the bonds payable  was $ 6,000   Premium should be amortized    120months
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over Requirement 3: Compute the amount of amortization of premium per month and for each 
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This note was uploaded on 11/03/2011 for the course AEM 2210 at Cornell.

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Demo_For_Chapter_10 - Demo Problem for Chapter...

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