Bonds Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond. To Prepare: The journal entry to record issuance of bonds payable.

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Answer 1

Question

Chapter 9, Problem 9.14BE

1.

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

To Prepare: The journal entry to record issuance of bonds payable.

2.

To determine

To Prepare: The journal entry to record first interest payment.

3.

To determine

To Explain: The reason interest expense increases each period.

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A bond traded at 971⁄2 means that a. The bond pays 971⁄2% interest. b. The bond trades at $975 per $1,000 bond. c. The market rate of interest is below the contract rate of interest for the bond. d. The bonds can be retired at $975 each. e. The bond’s interest rate is 21⁄2%.

Presented below is a partial amortization schedule for Premium Pizza.1. Record the bond issue assuming the face amount of bonds payable is $70,000. 2. Record the first interest payment. 3. Explain why interest expense decreases each period.

If bonds are issued at 101.25, this means thata. a $1,000 bond sold for $1,012.50.b. a $1,000 band sold for $101.25.c. the bonds sold at a discount.d. The bond rate of interest is 10.125% of the market rate of interest.

Answer 2

Question

Chapter 9, Problem 9.14BE

1.

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

To Prepare: The journal entry to record issuance of bonds payable.

2.

To determine

To Prepare: The journal entry to record first interest payment.

3.

To determine

To Explain: The reason interest expense increases each period.

Expert Solution & Answer

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Answer 3

Question

Chapter 9, Problem 9.14BE

1.

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

To Prepare: The journal entry to record issuance of bonds payable.

2.

To determine

To Prepare: The journal entry to record first interest payment.

3.

To determine

To Explain: The reason interest expense increases each period.

Expert Solution & Answer

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Answer 4

Question

Chapter 9, Problem 9.14BE

1.

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

To Prepare: The journal entry to record issuance of bonds payable.

2.

To determine

To Prepare: The journal entry to record first interest payment.

3.

To determine

To Explain: The reason interest expense increases each period.

Expert Solution & Answer

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Answer 5

Chapter 9, Problem 9.14BE

1.

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

To Prepare: The journal entry to record issuance of bonds payable.

2.

To determine

To Prepare: The journal entry to record first interest payment.

3.

To determine

To Explain: The reason interest expense increases each period.

Answer 6

Chapter 9, Problem 9.14BE

1.

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

To Prepare: The journal entry to record issuance of bonds payable.

Answer 7

Chapter 9, Problem 9.14BE

1.

To determine

Bonds

Bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations. It is a debt instrument used for the purpose of raising fund of the corporations or governmental agencies. If selling price of the bond is equal to its face value, it is called as par on bond. If selling price of the bond is lesser than the face value, it is known as discount on bond. If selling price of the bond is greater than the face value, it is known as premium on bond.

To Prepare: The journal entry to record issuance of bonds payable.

Answer 8

2.

To determine

To Prepare: The journal entry to record first interest payment.

Answer 9

2.

To determine

To Prepare: The journal entry to record first interest payment.

Answer 10

3.

To determine

To Explain: The reason interest expense increases each period.

Answer 11

3.

To determine

To Explain: The reason interest expense increases each period.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 9 - What is capital structure? How do the capital...Ch. 9 - Prob. 2RQ Ch. 9 - How do interest expense and the carrying value of...Ch. 9 - Prob. 4RQ Ch. 9 - What are bond issue costs? What is an underwriter?Ch. 9 - Why do some companies issue bonds rather than...Ch. 9 - Prob. 7RQ Ch. 9 - What are convertible bonds? How do they benefit...Ch. 9 - How do we calculate the issue price of bonds? Is...Ch. 9 - Prob. 10RQ

Solution Summary: The author explains that bonds are a kind of interest bearing notes payable, usually issued by companies, universities and governmental organizations.

To Prepare: The journal entry to record first interest payment.

To Explain: The reason interest expense increases each period.

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Chapter 9 Solutions