Problem 3- Bonds Payable Harrisburg Light and Power Company Please review the assumptions for three alternative bond transactions and answer Requirements A through D below: REQ A State the pricina basis for the Bond issue ea. ("Discount". "Premium" or "Par") -4 A B C REQ B - 4 REQ C For Each, indicate whether the balance sheet value of the bond liability will "increase", "decrease" or "remain constant" over the life of the bond 4 B C REQ D For Each bond issuance indicate whether the interest expense recognized each period will "increase" "decrease" or "remain constant" over the life of the bond A B C 26 27 28 29 30 31 32 33 34 35 36 37 Bond Issuance 12-31-x1 B Price A C Price B C ANSWER BOX $ $ $ Face Value 300,000 400,000 500,000 PV Interest PV Principal PV Total PV Interest PV Principal PV Total PV Interest PV Principal Stated Coupon Interest Rate PV Total 6% 8% 6% Effective Market Interest Rate 6% Insert All Computations for the Amortization Data using Excel Data tools or Tables here: A Comments: Price 6% 8% 10 years Life Comments: Comments: 7 years 5 years -

Problem 3- Bonds Payable Harrisburg Light and Power Company Please review the assumptions for three alternative bond transactions and answer Requirements A through D below: REQ A State the pricina basis for the Bond issue ea. ("Discount". "Premium" or "Par") -4 A B C REQ B - 4 REQ C For Each, indicate whether the balance sheet value of the bond liability will "increase", "decrease" or "remain constant" over the life of the bond 4 B C REQ D For Each bond issuance indicate whether the interest expense recognized each period will "increase" "decrease" or "remain constant" over the life of the bond A B C 26 27 28 29 30 31 32 33 34 35 36 37 Bond Issuance 12-31-x1 B Price A C Price B C ANSWER BOX $ $ $ Face Value 300,000 400,000 500,000 PV Interest PV Principal PV Total PV Interest PV Principal PV Total PV Interest PV Principal Stated Coupon Interest Rate PV Total 6% 8% 6% Effective Market Interest Rate 6% Insert All Computations for the Amortization Data using Excel Data tools or Tables here: A Comments: Price 6% 8% 10 years Life Comments: Comments: 7 years 5 years -

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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