Question

Analyzing and Reporting Financial Statement Effects of Bond Transactions On January 1, 2012, Trueman Corporation issued $400,000 of 20-year, 11% bonds for $369,908, yielding a market (yield) rate of 12%. Interest is payable semiannually on June 30 and December 31. (a) Confirm the bond issue price. Use Excel or a financial calculator to computer your answers. Round your answers to the nearest whole number. Present value of principal repayment $Answer 38,889 Present value of interest payments $Answer 331,018 Selling price of bonds $ 369,908 (b) Indicate the financial statement effects using the template for (1) bond issuance, (2) semiannual interest payment and discount amortization on June 30, 2012, and (3) semiannual interest payment and discount amortization on December 31, 2012. Round answers to nearest whole number. Use negative signs with answers, when appropriate. Balance Sheet Transaction Cash Asset + Noncash Assets = Liabilities + Contributed Capital + Earned Capital (1) Answer 369,907 Answer 0 Answer 369,907 Answer 0 Answer 0 (2) Answer (22,000) Answer 0 Answer (206.09) Answer 0 Answer (22,000) (3) Answer (22,000) Answer 0 Answer 0 Answer 0 Answer (22,206.09) Income Statement Revenue - Expenses = Net Income Answer 0 Answer 0 Answer 0 Answer 0 Answer 0 Answer 0 Answer 0 Answer 0 Answer 0

Answer 1

Balance Sheet
Transaction	Cash Asset	+	Noncash Assets	=	Liabilities	+	Contributed Capital	+	Earned Capital
1	$3,69,908.00		$                         -		$3,69,908.00		$                                  -
2	$ -22,000.00		$              -194.48		$                   -		$                                  -		$      -22,194.48
3	$ -22,000.00		$              -206.15		$                   -		$                                  -		$       22,206.15

	Income Statement
	Revenue	-	Expenses	=	Net Income
1	0		0		0
2	0		22194.48		-22194.48
3	0		22206.15		-22206.15

Hope this helps, let know for clARrifications if any. Thanks