This preview shows pages 1–3. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Interest rate called stated rate or coupon rate. Proceeds at issuance: amount collected when bonds are issued. Bond issued at par • Stated rate = effective interest rate • Face value = proceeds at issuance Bonds issued at a discount • Stated rate < effective interest rate • Face value > proceeds at issuance Bonds issued at a premium • Stated rate > effective interest rate • Face value < proceeds at issuance Given: Face amount= 50,000 Annual stated rate = 10% Life of the bond is 2 yrs. Case 1: Bond proceeds= 50,000 Is the bond issued at par, a discount or a premium? Journal entry Case 2: Bond proceeds= 52,000 Is the bond issued at par, a discount or a premium? Journal entry Case 3: Bond proceeds= 48,000 Is the bond issued at par, a discount or premium? Journal entry Amortization of the discount or premium 1.Straight line Method 2. Effective interest method Early Retirement of Bonds...
View Full Document
This note was uploaded on 03/02/2012 for the course BUISNESS 230a taught by Professor Stanley during the Fall '08 term at Sonoma.
- Fall '08