In: Accounting
On February? 28,
2016?,
Dolphin
Corp. issues
6?%,
10?-year
bonds payable with a face value of
=$900,000.
The bonds pay interest on February 28 and August 31.
DolphinDolphin
Corp. amortizes bond discount by the? straight-line method.
1. |
If
the market interest rate is
5?% whenDolphinDolphin Corp. issues its? bonds, will the bonds be priced at?par, at a? premium, or at a? discount? Explain. |
|
2. |
If
the market interest rate is
7?% whenDolphinDolphin Corp. issues its? bonds, will the bonds be priced at?par, at a? premium, or at a? discount? Explain. |
|
3. |
Assume that the issue price of the bonds is
93. Journalize the following bonds payable transactions. |
|
a. |
Issuance of the bonds on February? 28,
2016. |
|
b. |
Payment of interest and amortization of the bond discount on
August? 31,
2016. |
|
c. |
Accrual of interest and amortization of the bond discount on
December? 31,
2016?, the? year-end. |
|
d. |
Payment of interest and amortization of the bond discount on
February? 28,
2017. |
|
4. |
Report interest payable and bonds payable as they would appear on
the
Dolphin Corp. balance sheet at December? 31,2016. |