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Bond Transactions Brand Company issued $1,140,000 face value, eight-year, 8% bonds on April 1, 2017, when the market rate of interest was 8%. Interest payments are due every October 1 and April 1. Brand uses a calendar year-end.

Bond Transactions Brand Company issued $1,140,000 face value, eight-year, 8% bonds on April 1, 2017, when the market rate of interest was 8%. Interest payments are due every October 1 and April 1. Brand uses a calendar year-end.

FINANCIAL ACCOUNTING
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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Bond Transactions

Brand Company issued $1,140,000 face value, eight-year, 8% bonds on April 1, 2017, when the market rate of interest was 8%. Interest payments are due every October 1 and April 1. Brand uses a calendar year-end.

 

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Required: 1. Identify and analyze the effect of the issuance of the bonds on April 1, 2017. Activity Accounts Statement(s) How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Activity Accounts Assets Statement(s) 2. Identify and analyze the effect of the interest payment on October 1, 2017. Assets 3. On December 31, Brand should = Total cash outflows Balance Sheet = $ Liabilities How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Balance Sheet Liabilities Stockholders' Equity + 4. Determine the total cash inflows and outflows that occurred on the bonds over the eight-year life. Total cash inflows Stockholders' Equity Revenues Revenues Income Statement Income Statement Expenses Expenses = Net Income Net Income
Transcribed Image Text:Required: 1. Identify and analyze the effect of the issuance of the bonds on April 1, 2017. Activity Accounts Statement(s) How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Activity Accounts Assets Statement(s) 2. Identify and analyze the effect of the interest payment on October 1, 2017. Assets 3. On December 31, Brand should = Total cash outflows Balance Sheet = $ Liabilities How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Balance Sheet Liabilities Stockholders' Equity + 4. Determine the total cash inflows and outflows that occurred on the bonds over the eight-year life. Total cash inflows Stockholders' Equity Revenues Revenues Income Statement Income Statement Expenses Expenses = Net Income Net Income
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