As an alternative, you are contemplating to incorporate and issue a bond to raise the capital instead of borrowing from the bank. Required part C Is there an advantage to issuing bonds rather than borrowing money from the bank? Suppose you decide to go this route and you issue a $130,000, 9%, 5-year bonds for $115,375 when the market rate is 12%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. July 1, 2021: entry to record issuing the bonds. 31, 2021: entry to record payment of interest to bondholders. 31, 2021: entry to record amortization of premium.
As an alternative, you are contemplating to incorporate and issue a bond to raise the capital instead of borrowing from the bank. Required part C Is there an advantage to issuing bonds rather than borrowing money from the bank? Suppose you decide to go this route and you issue a $130,000, 9%, 5-year bonds for $115,375 when the market rate is 12%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments. The premium is amortized using the straight-line method. Prepare journal entries for the following transactions. July 1, 2021: entry to record issuing the bonds. 31, 2021: entry to record payment of interest to bondholders. 31, 2021: entry to record amortization of premium.
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 3EA: Krystian Inc. issued 10-year bonds with a face value of $100,000 and a stated rate of 4% when the...
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As an alternative, you are contemplating to incorporate and issue a bond to raise the capital instead of borrowing from the bank.
Required part C
- Is there an advantage to issuing bonds rather than borrowing money from the bank?
- Suppose you decide to go this route and you issue a $130,000, 9%, 5-year bonds for $115,375 when the market rate is 12%. The bonds pay interest semi-annually. Prepare an amortization table for the first three payments.
- The premium is amortized using the straight-line method. Prepare
journal entries for the following transactions.- July 1, 2021: entry to record issuing the bonds.
- 31, 2021: entry to record payment of interest to bondholders.
- 31, 2021: entry to record amortization of premium.
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