On the last day of its fiscal year ending December 31, 2024, the Safe & Reliable (S&R) Glass Company completed two financing arrangements. The funds provided by these initiatives will allow the company to expand its operations. S&R issued 7% stated rate bonds with a face amount of $100 million. The bonds mature on December 31, 2044 (20 years). The market rate of interest for similar bond issues was 8% (4.0% semiannual rate). Interest is paid semiannually (3.5%) on June 30 and December 31, beginning on June 30, 2025. The company leased two manufacturing facilities. Lease A requires 20 annual lease payments of $360,000 beginning on January 1, 2025. Lease B also is for 20 years, beginning January 1, 2025. Terms of the lease require 17 annual lease payments of $380,000 beginning on January 1, 2028. Generally accepted accounting principles require both leases to be recorded as liabilities for the present value of the scheduled payments. Assume that a 9% interest rate properly reflects the time value of money for the lease obligations. What amounts will appear in S&R's December 31, 2024, balance sheet for the bonds and for the leases? Bond Liability? Lease A Liabilty? Lease B Liability?

On the last day of its fiscal year ending December 31, 2024, the Safe & Reliable (S&R) Glass Company completed two financing arrangements. The funds provided by these initiatives will allow the company to expand its operations. S&R issued 7% stated rate bonds with a face amount of $100 million. The bonds mature on December 31, 2044 (20 years). The market rate of interest for similar bond issues was 8% (4.0% semiannual rate). Interest is paid semiannually (3.5%) on June 30 and December 31, beginning on June 30, 2025. The company leased two manufacturing facilities. Lease A requires 20 annual lease payments of $360,000 beginning on January 1, 2025. Lease B also is for 20 years, beginning January 1, 2025. Terms of the lease require 17 annual lease payments of $380,000 beginning on January 1, 2028. Generally accepted accounting principles require both leases to be recorded as liabilities for the present value of the scheduled payments. Assume that a 9% interest rate properly reflects the time value of money for the lease obligations. What amounts will appear in S&R's December 31, 2024, balance sheet for the bonds and for the leases? Bond Liability? Lease A Liabilty? Lease B Liability?

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018

18th Edition

ISBN:9780079039897

Author:Carter

Publisher:Carter

Chapter7: Exponents And Exponential Functions

Section: Chapter Questions

Problem 68SGR

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Question

S&R issued 7% stated rate bonds with a face amount of $100 million. The bonds mature on December 31, 2044 (20 years). The market rate of interest for similar bond issues was 8% (4.0% semiannual rate). Interest is paid semiannually (3.5%) on June 30 and December 31, beginning on June 30, 2025.
The company leased two manufacturing facilities. Lease A requires 20 annual lease payments of $360,000 beginning on January 1, 2025. Lease B also is for 20 years, beginning January 1, 2025. Terms of the lease require 17 annual lease payments of $380,000 beginning on January 1, 2028. Generally accepted accounting principles require both leases to be recorded as liabilities for the present value of the scheduled payments. Assume that a 9% interest rate properly reflects the time value of money for the lease obligations.

What amounts will appear in S&R's December 31, 2024, balance sheet for the bonds and for the leases?

Bond Liability?

Lease A Liabilty?

Lease B Liability?

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