Horngren's Financial & Managerial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (5th Edition)

5th Edition

ISBN: 9780134078908

Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura

Publisher: PEARSON

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Textbook Question

Chapter 12, Problem 12.40BP

Analyzing and journalizing bond transactions

On January 1, 2016, Texas Credit Union (TCU) issued 6%, 20-year bonds payable with Face value of $600,000. The bonds pay interest on June 30 and December 31.

Requirements

1. If the market interest rate is 5% when TCU issues its bonds, will the bonds be priced at Face value, at a premium, or at a discount? Explain.

2. If the market interest rate is 9% when TCU issues its bonds, will the bonds be priced at Face value, at a premium, or at a discount? Explain.

3. The issue price of the bonds is 96. Journalize the following bond transactions:

a. Issuance of the bonds on January 1, 2016.

b. Payment of interest and amortization on June 30, 2016.

c. Payment of interest and amortization on December 31, 2016.

d. Retirement of the bond at maturity on December 31, 2035.

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Chapter 12, Problem 12.39BP

Chapter 12, Problem 12.41BP

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Chapter 12 Solutions

Horngren's Financial & Managerial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (5th Edition)

Ch. 12 - Flipco signed a 10-year note payable on January 1,...Ch. 12 - Daniels's bonds payable carry a stated interest...Ch. 12 - A bond that matures in installments at regular...Ch. 12 - Prob. 4QC Ch. 12 - Nicholas Smith Fitness Gym has 700,000 of 20-year...Ch. 12 - Prob. 6QC Ch. 12 - Prob. 7QC Ch. 12 - The debt to equity ratio is calculated as a. Total...Ch. 12 - Mike Gordon wishes to have 80,000 in five years....Ch. 12 - Prob. 10BQC

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Solution Summary: The author explains that bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

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