Chap010 Probs - Chapter 10 - Reporting and Interpreting...

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Unformatted text preview: Chapter 10 - Reporting and Interpreting Bonds Chapter 10 Reporting and Interpreting Bonds EXERCISES E101. 1. Bond principal, par value, or face value 2. Par value or face value 3. Face value or par value 4. Stated rate, coupon rate, or contract rate 5. Debenture 6. Callable bonds 7. Convertible bonds E104. CASE A: $100,000 x 0.5835......................................................... $ 58,350 $8,000 x 5.2064............................................................. 41,651 Issue price (market and stated rate same).................... $100,001 (at par; $1 rounding error) CASE B: $100,000 x 0.6651......................................................... $ 66,510 $8,000 x 5.5824............................................................. 44,659 Issue price (market rate less than stated rate).............. $111,169 (at a premium) CASE C: $100,000 x 0.5132......................................................... $ 51,320 $8,000 x 4.8684............................................................. 38,947 Issue price (market rate more than stated rate)............. $ 90,267 (at a discount) E109. 10-1 Chapter 10 - Reporting and Interpreting Bonds Computations: Interest: $600,000 x 7.5% x 1/2 = $ 22,500 Present value: $600,000 x 0.7168 = 430,080 $ 22,500 x 6.6638 = 149,936 Issue price = $580,016 Req. 1 January 1: Cash (+A)............................................................................... 580,016 Discount on Bonds Payable (+XL, -L).................................... 19,984 Bonds Payable (+L)............................................................Bonds Payable (+L)....
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This note was uploaded on 03/07/2012 for the course ACCT 225 taught by Professor Canace during the Spring '08 term at South Carolina.

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Chap010 Probs - Chapter 10 - Reporting and Interpreting...

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