M1 ABC Corp issued a bond for $84,600 at par. Thebond will mature in 10 years when the principal willbe paid, additionally every six months couponinterest will be paid. The issue date was plannedfor July 1st when the market interest rate was at6%. However the bonds are actually sold onSeptember 1st when the market interest rate was5%. ABC Corp. prepares its annual financialstatements on October 31st.Required 1: What is the amount of cash received byABC Corp. on September 1st? $Required 2: What is the amount of interest payablerecognized in the books as of October 31st of year1? $Required 3: What is the amount of loan payablecancelled in year 10? $

ABC Corp issued a bond for $84,600 at par. The bond will mature in 10 years when the principal will be paid, additionally every six months coupon interest will be paid. The issue date was planned for July 1st when the market interest rate was at 6%. However the bonds are actually sold on

ABC Corp issued a bond for $84,600 at par. The bond will mature in 10 years when the principal will be paid, additionally every six months coupon interest will be paid. The issue date was planned for July 1st when the market interest rate was at 6%. However the bonds are actually sold on

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 15MCQ

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Question

ABC Corp issued a bond for $84,600 at par. The
bond will mature in 10 years when the principal will
be paid, additionally every six months coupon
interest will be paid. The issue date was planned
for July 1st when the market interest rate was at
6%. However the bonds are actually sold on
September 1st when the market interest rate was
5%. ABC Corp. prepares its annual financial
statements on October 31st.
Required 1: What is the amount of cash received by
ABC Corp. on September 1st? $
Required 2: What is the amount of interest payable
recognized in the books as of October 31st of year
1? $
Required 3: What is the amount of loan payable
cancelled in year 10? $

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