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the "$" sign in your re sponse .)
June 30 General Journal Debit
46,884 Ca sh
Discount on bonds pa ya ble
Bonds pa ya ble Credit 3,116
50,000 c. W hy were the bonds is s ued at a dis c ount?
The bonds w e re sold a t a discount be ca use the coupon ra te of inte re st, 9%, w a s le ss tha n the
m a rke t ra te of inte re st, 10%. Learning Objective: B-05 Com pute the pres ent values of
future cas h flows . W orksheet Learning Objective: B-03 Explain three bas ic ways in which Learning Objective: B-06 Dis cus s accounting applications
decis ion m akers apply the tim e value of m oney.
of the concept of pres ent value. Us e Table PV-1 (in Ex hibit B-7) and Table PV-2 (in Ex hibit B-9)
On June 30 of the c urrent y ear, Rural Gas & Elec tric Co. is s ued $50,000,000 fac e value, 9 perc ent, 10-y ear
bonds pay able, with interes t dates of Dec ember 31 and June 30. The bonds were is s ued at a dis c ount,
res ulting in an effec tive s emiannual interes t rate...
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This note was uploaded on 01/30/2014 for the course ACC 111 taught by Professor Angela during the Fall '08 term at Delaware County CC.
- Fall '08