1(a). Prepare journal entries to record the issuance of Frenza bonds on January 1, Year 1. 1(b). Prepare journal entries to record the first and second interest payments on June 30, Year 1, and December 31, Year 1. 1(c). Prepare journal entries to record the maturity of the bonds on December 31, Year 3. 2. Frenza needs to raise money to purchase new equipment. The founder is concerned about losing ownership control of her company. Which of the following ways to raise money would we recommend? 3. Frenza needs to raise money to purchase more inventory. The founder is concerned about the company's ability to make required cash payments when cash flows are low. Which of the following ways to raise money would we recommend?
1(a). Prepare journal entries to record the issuance of Frenza bonds on January 1, Year 1. 1(b). Prepare journal entries to record the first and second interest payments on June 30, Year 1, and December 31, Year 1. 1(c). Prepare journal entries to record the maturity of the bonds on December 31, Year 3. 2. Frenza needs to raise money to purchase new equipment. The founder is concerned about losing ownership control of her company. Which of the following ways to raise money would we recommend? 3. Frenza needs to raise money to purchase more inventory. The founder is concerned about the company's ability to make required cash payments when cash flows are low. Which of the following ways to raise money would we recommend?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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
Transcribed Image Text:The founder of Frenza asks us to assist her in accounting and analysis of the corporation's bonds, which have an annual contract rate
of 8%. She wants to know the business and accounting implications of further debt issuances as she looks for ways to finance the
growth of Frenza. The following Tableau Dashboard is provided to help us address her questions and provide recommendations for
her business decisions.
$100,000
$80,000
$60,000
$40,000
$20,000
$O
Frenza Bond Amortization
H
January 1, Year June 30, Year 1 December 31, June 30, Year 2 December 31, June 30, Year 3 December 31,
1
Year 1
Year 2
Year 3
Cash & Inventory for
Competing Companies
Frenza
Lika
Nelo
10%
Carrying Value
Unamortized Discount
Market Rate for Company
Bonds
(Frenza)

Transcribed Image Text:Cash & Inventory for
Competing Companies
Frenza
$50,000
$40,000
$30,000
$20,000
$10,000
$0
Cash
Inventory
Cash
Lika
Inventory
Cash
Nelo
Inventory
10%
8%
6%
4%
2%
0%
Market Rate for Company
Bonds
Frenza
Net Income
Total Equity & Net Income
Frenza
Lika
$100,000
$190,000
Total Equity
Lika
$400,000
$530,000
Nelo
K
Nelo
$85,000
$275,000
#+ableau
1(a). Prepare journal entries to record the issuance of Frenza bonds on January 1, Year 1.
1(b). Prepare journal entries to record the first and second interest payments on June 30, Year 1, and December 31, Year 1.
1(c). Prepare journal entries to record the maturity of the bonds on December 31, Year 3.
2. Frenza needs to raise money to purchase new equipment. The founder is concerned about losing ownership control of her
company. Which of the following ways to raise money would we recommend?
3. Frenza needs to raise money to purchase more inventory. The founder is concerned about the company's ability to make required
cash payments when cash flows are low. Which of the following ways to raise money would we recommend?
ņ O
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