1 When companies offer new debt security issues, they publicize the offerings in the financial press and on Internet sites. Assume thefollowing were among the debt offerings reported in December 2024:New Securities IssuesCorporateNational Equipment Transfer Corporation-$210 million bonds via lead managers SecondTennessee Bank N.A. and Morgan, Dunavant & Company, according to a syndicate official.Terms: maturity, December 15, 2033; coupon 7.56%; issue price, par; yield, 7.56%;noncallable; debt ratings: Ba-1 (Moody's Investors Service, Incorporated), BBB+(Standard & Poor's).IgWig Incorporated-$360 million of notes via lead manager Stanley Brothers,Incorporated, according to a syndicate official. Terms: maturity, December 1, 2035;coupon, 6.56%; Issue price, 99; yield, 6.66%; call date, NC; debt ratings: Baa-1(Moody's Investors Service, Incorporated), A (Standard & Poor's).Required:1. Prepare the appropriate journal entries to record the sale of both issues to underwriters. Ignore share issue costs and assume noaccrued interest.2. Prepare the appropriate journal entries to record the first semiannual interest payment for both issues.

Journal entries are made to record the transactions as the first process in the books of accounts…

Answered: When companies offer new debt security…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter7: Financial Activities

Section: Chapter Questions

Problem 11QE

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The following information is also available: 1. Current assets include cash P3,800, accounts receivables P18,500, note receivables (maturity date is on July 1,2023) P10,000 and land P12,000. 2. Long term investments include a P4,600 investment in fair value though other comprehensive income securitiesthat is expected to be sold in 2022 and a P9,000 investment in AllDay company bonds that are expected to be helduntil their December 31, 2029 maturity date. 3. Property and equipment include buildings costing P63,400, inventories costing P30,500 and equipment costingP29,600. 4. Intangible assets include patents that cost P8,200 and on which P2,300 amortization have accumulated, andtreasury shares that costs P1,800. 5. Other assets include prepaid insurance (which expires on November 30, 2022) P2,900, sinking fund for bondretirement P7,000 and trademarks that cost P5,200 and on which P1,500 amortization has accumulated. 6. Current liabilities include accounts payable P19,400, bonds payable…
The following information is also available: 1. Current assets include cash P3,800, accounts receivables P18,500, note receivables (maturity date is on July 1, 2023) P10,000 and land P12,000. 2. Long term investments include a P4,600 investment in fair value though other comprehensive income securities that is expected to be sold in 2022 and a P9,000 investment in AllDay company bonds that are expected to be held until their December 31, 2029 maturity date. 3. Property and equipment include buildings costing P63,400, inventories costing P30,500 and equipment costing P29,600. 4. Intangible assets include patents that cost P8,200 and on which P2,300 amortization have accumulated, and treasury shares that costs P1,800. 5. Other assets include prepaid insurance (which expires on November 30, 2022) P2,900, sinking fund for bond retirement P7,000 and trademarks that cost P5,200 and on which P1,500 amortization has accumulated. 6. Current liabilities include accounts payable P19,400, bonds…
When companies offer new debt security issues, they publicize the offerings in the financial press and on Internet sites. Assume the following were among the debt offerings reported in December 2024: New Securities Issues Corporate National Equipment Transfer Corporation-$218 million bonds via lead managers Second Tennessee Bank N.A. and Morgan, Dunavant & Company, according to a syndicate official. Terms: maturity, December 15, 2033; coupon 7.64%; issue price, par; yield, 7.64%; noncallable; debt ratings: Ba-1 (Moody's Investors Service, Incorporated), BBB+ (Standard & Poor's). IgWig Incorporated-$368 million of notes via lead manager Stanley Brothers, Incorporated, according to a syndicate official. Terms: maturity, December 1, 2035; coupon, 6.64%; Issue price, 99; yield, 6.74%; call date, NC; debt ratings: Baa-1 (Moody's Investors Service, Incorporated), A (Standard & Poor's). Required: 1. Prepare the appropriate journal entries to record the sale of both issues to underwriters.…
Your answer is partially correct. Swifty Ltd. issued a $1,184,000, 10-year bond dated January 1, 2023. The bond was sold to yield 12% effective interest. The bond paid 10% interest on January 1 and July 1 each year. The company's year-end was December 31, and Swifty followed IFRS. Using 1. factor Tables 2. a financial calculator, or 3. Excel function PV, calculate the amount received for the bond, and any discount or premium on the bond.
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Accounting for debt investments League Up & Co. owns vast amounts of corporate bonds. Suppose League Up buys $900,000 of CocoCorp bonds at face value on January 2, 2018. The CocoCorp bonds pay interest at the annual rate of 8% on June 30 and December 31 and mature on December 31, 2022. League Up intends to hold the investment until maturity. Requirements How would the bond investment be classified on League up’s December 31, 2018, balance sheet? Journalize the following on League Up’s books: a. Receipt of final interest payment, on December 31, 2022. b. Disposition of the investment at maturity on December 31, 2022.
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