Santa Corporation issued a bond on January 1 of this year with a face value of $1,000. The bond's coupon rate is 7 percent and interest is paid once a year on December 31. The bond matures in three years. The annual market rate of interest was 9 percent at the time the bond was sold. The following amortization schedule pertains to the bond issued: January 1, Year 1 December 31, Year 1 December 31, Year 2 December 31, Year 3 Required: Required 1 to 3 Cash Paid Required 4 $70 70 70 Interest Expense Amortization $15 17 19 1. What was the bond's issue price? 2. Did the bond sell at a discount or a premium? How much was the premium or discount? 3. What amount(s) should be shown on the balance sheet for bonds payable at the end of Year 1 and Year 2? 4. Show how the following amounts were computed for Year 2: (a) $70, (b) $87, (c) $17, and (d) $981. Complete this question by entering your answers in the tabs below. 3. Bonds payable year 1 3. Bonds payable year 2 $85 87 89 Balance $949 964 981 1,000 1. What was the bond's issue price? 2. Did the bond sell at a discount or a premium? How much was the premium or discount? 3. What amount(s) should be shown on the balance sheet for bonds payable at the end of Year 1 and Year 2? 1. Bond issue price
Santa Corporation issued a bond on January 1 of this year with a face value of $1,000. The bond's coupon rate is 7 percent and interest is paid once a year on December 31. The bond matures in three years. The annual market rate of interest was 9 percent at the time the bond was sold. The following amortization schedule pertains to the bond issued: January 1, Year 1 December 31, Year 1 December 31, Year 2 December 31, Year 3 Required: Required 1 to 3 Cash Paid Required 4 $70 70 70 Interest Expense Amortization $15 17 19 1. What was the bond's issue price? 2. Did the bond sell at a discount or a premium? How much was the premium or discount? 3. What amount(s) should be shown on the balance sheet for bonds payable at the end of Year 1 and Year 2? 4. Show how the following amounts were computed for Year 2: (a) $70, (b) $87, (c) $17, and (d) $981. Complete this question by entering your answers in the tabs below. 3. Bonds payable year 1 3. Bonds payable year 2 $85 87 89 Balance $949 964 981 1,000 1. What was the bond's issue price? 2. Did the bond sell at a discount or a premium? How much was the premium or discount? 3. What amount(s) should be shown on the balance sheet for bonds payable at the end of Year 1 and Year 2? 1. Bond issue price
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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