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In May 2017, Apple Inc., filed a prospectus with the SEC, indicating that it would be...

In May 2017, Apple Inc., filed a prospectus with the SEC, indicating that it would be issuing another $7 billion in bonds during 2017. (Apple now has almost $100 billion in debt). With the bond proceeds, Apple will be buying back its own stock and paying large dividends to shareholders.

1. What journal entry would Apple make when it issues $7 billion in bonds (ignore underwriting fees and assume the bonds were issued at par value May 31, 2017)? Please show debits and credits.

2. How are assets, liabilities, and equity impacted by the bond issuance?

3. On what financial statement is the balance of bonds payable shown? Where is it shown on that financial statement?

4. What journal entry would Apple make when it purchases its own stock? Assume Apple bought back 9,000,000 shares for $145 each on June 22, 2017. Please show debits and credits.

5. How are assets, liabilities, and equity impacted by the stock buyback?

6. On what financial statement is the balance of treasury stock shown? How is treasury stock shown on that financial statement?

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ekkarill92 answered 1 year ago
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