1) ZBar sells 40 bonds with a face value of $10,000 each on January 1, 2018. 2) The board of directors determines these bonds will have a 5 year life, have a stated rate of 18%, and pay interest semiannually. 3) The current market rate is found to be 12% on the date of sale. Calculation of Cash Proceeds: Step 1: Cash Payment of Interest Step 2: Present Values of Paid Amounts Partial Repayment Schedule (Just the first 4 periods) Carrying Value Cash Interest Face Date PMT Expense Amort. Premium Value START 1/1/2018 Period # 1 6/30/2018 Period # 2 12/31/2018 Period # 3 6/30/2019 Period # 4 12/31/2019

1) ZBar sells 40 bonds with a face value of $10,000 each on January 1, 2018. 2) The board of directors determines these bonds will have a 5 year life, have a stated rate of 18%, and pay interest semiannually. 3) The current market rate is found to be 12% on the date of sale. Calculation of Cash Proceeds: Step 1: Cash Payment of Interest Step 2: Present Values of Paid Amounts Partial Repayment Schedule (Just the first 4 periods) Carrying Value Cash Interest Face Date PMT Expense Amort. Premium Value START 1/1/2018 Period # 1 6/30/2018 Period # 2 12/31/2018 Period # 3 6/30/2019 Period # 4 12/31/2019

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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