On September 30, 2014. Sky Company issued 8% bonds with a par value of A$500,000 due in 20 years. They were issued for A$414,207 to yield 10% and were callable at 104 at any date after September 30, 2021. Because of lower interest rates and a significant change in the company's credit rating, it was decided to call the entire issue on September 30, 2022, and to issue new bonds. New 6% bonds with a face amount of A$800,000 were sold for A$900,410 to yield 5%; they mature in 20 years. Interest payment dates are March 31 and September 30 for both the old and new bonds.

On September 30, 2014. Sky Company issued 8% bonds with a par value of A$500,000 due in 20 years. They were issued for A$414,207 to yield 10% and were callable at 104 at any date after September 30, 2021. Because of lower interest rates and a significant change in the company's credit rating, it was decided to call the entire issue on September 30, 2022, and to issue new bonds. New 6% bonds with a face amount of A$800,000 were sold for A$900,410 to yield 5%; they mature in 20 years. Interest payment dates are March 31 and September 30 for both the old and new bonds.

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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