Sikes Corporation, whose annual accounting period ends on December 31, issued the following bonds: Date of bonds: January 1, 2018

Question

Sikes Corporation, whose annual accounting period ends on December 31, issued the following bonds:

Date of Bonds Issued: January 1, 2018  
Maturity Amount and Date: $300,000 due in 10 years (December 31, 2027)  
Interest Rate: 10 percent per year, payable each December 31

Required: For each of the three independent cases that follow, provide the amounts to be reported on the financial statements as of January 1, 2018, immediately after the bonds are issued. Please note that deductions should be indicated with a minus sign. Refer to Exhibit 10.5 for an illustration that distinguishes between Bonds Payable and their carrying value.

Anonymous · Accepted Answer

Case A (issued at 100)       Case B(at 97)      Case C(at 101)$300,000                             $291,000               $303,000The financial statements for Case ALong term liabilities: Bonds payable $300,000The financial statements for Case BLong term liabilities:Bonds payable $300,000Unamortized discount $9,000 The financial statements for Case CLong term liabilities:Bonds payable $300,000Unamortized premium $3,000

Anonymous · Answer

Question in order:See the first image attachedAnswer and Explanation:Reported amount as of 1, January 2018 after bonds were issued is as below                                        CASE A             CASE B             CASE C                                        Issued at 100    Issued at 95     issued at 103a. Bonds Payable           $130,000          $130,000          $130,000b. Discount Premium     $0                      $6,500              $3,900                                                                   Discount            Premium                                                                   130,000×(100    130,000×(100-                                                                    -95)⁰/₀                103)⁰/₀c. Carrying value             $130,000          $123,500           $133,900payable bonds would be the maturity amount or face value of bonds. The bonds payable would remain same, that is, $130,000 in each case.In case B, the discount is calculated because the bonds are issued at a price which is less than the face valuein case C, The premium is calculated when the bond are issued at a price that is more than the face valueCarrying value will be calculated by deducting the discount from the bond s payable or by adding the premium in the bonds payable

Anonymous · Answer

Cis te correct i think i c idk but i think it is c

Christina Upton · Answer

Wite quickly without over thinking .

Anonymous

Sikes Corporation, whose annual accounting period ends on December 31, issued the following bonds: Date of bonds: January 1, 2018

4 Answers

AI-Powered Insights

Want to answer this question?

Categories

Tags

Related Questions