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Issue price of Bonds:
The Bonds issuance shall be done at the price which is equal to present values of all the
Bonds Issuance:
The bonds issuance by the company is a source of long term financing and is issued at a discount or premium depending the prevailing market rate of interest and stated rate of interest on bonds. When the stated rate of interest is higher than the market rate of interest, then the investors will be ready to invest only in the situation when the bonds are issued at premium. This premium on bonds issue shall be treated as income by deducting the amortized portion from the cash interest paid to arrive at the interest expense of the period.When the market rate of interest is higher than stated rate of interest, then the bonds shall be issued at discount, which shall be kept as unamortized expenses in
However, when the market rate of interest is equal to stated rate of interest then the bonds are issued at par value.
The determination of issue price of bonds when the market rate of interest is 10%.
The
The determination of issue price of bonds when the market rate of interest is 12%.
The Journal entry for the issuance of bonds.
Requirement 3-a:
The determination of issue price of bonds when the market rate of interest is 14%.
The Journal entry for the issuance of bonds.
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Chapter 14 Solutions
FUND.ACCT.PRIN.(LOOSELEAF)-W/ACCESS
- Baxter Solutions has sales of $1,480,000, costs of $710,000, depreciation expenses of $95,000, and interest expenses of $40,000. The company is subject to a 28% tax rate. a. Calculate the net income for the firm. b. If the company paid out $100,000 in cash dividends, calculate the increase to retained earnings.arrow_forwardA company sells a product for $75 per unit. Variable costs are $45 per unit, and fixed costs total $180,000 per year. How many units must be sold to achieve a target profit of $120,000? Give answerarrow_forwardgeneral accountingarrow_forward
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