Question
In: Accounting
Sikes Corporation, whose annual accounting period ends on December 31, issued the following bonds: Date of...
| Sikes Corporation, whose annual accounting period ends on December 31, issued the following bonds: |
| Date of bonds: January 1, 2015 |
| Maturity amount and date: $180,000 due in 10 years (December 31, 2024) |
| Interest: 10 percent per year payable each December 31 |
| Date issued: January 1, 2015 |
| Required: |
| 1. |
For each of the three independent cases that follow, provide the following amounts to be reported on the January 1, 2015, financial statements immediately after the bonds are issued. TIP: See Exhibit 10.5 for an illustration distinguishing Bonds Payable from their carrying value. (Negative amounts should be indicated with a minus sign.) |
Solutions
Expert Solution
The following amounts to be reported on the January 1, 2015, financial statements immediately after the bonds are issued:-
Case a: If Bonds issued at $ 100
Bonds Payable $ 180,000
Case b: If Bonds issued at $ 96
Bonds Payable $ 180,000
Less: Unamortized Discount on Bonds $7,200
------------------
Unpaid Bond Liabilities $ 172,800
--------------------
Case c: If Bonds issued at $ 102
Bonds Payable $ 180,000
Add: Unamortized Discount on Bonds $ 3,600
------------------
Unpaid Bond Liabilities $ 183,600
--------------------
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