Exercise 10-9 Straight-Line: Bond computations, amortization, and bond retiremen

Question

Exercise 10-9 Straight-Line: Bond computations, amortization, and bond retirement LO P2, P4

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On January 1, 2017, Shay issues $390,000 of 8%, 20-year bonds at a price of 97.00. Six years later, on January 1, 2023, Shay retires 20% of these bonds by buying them on the open market at 104.50. All interest is accounted for and paid through December 31, 2022, the day before the purchase. The straight-line method is used to amortize any bond discount.

Exercise 10-9 Part 1

1. How much does the company receive when it issues the bonds on January 1, 2017?
  

Explanation / Answer

Face Value of Bonds = $390,000 Proceed from Issue = 97.00% * Face Value Proceed from Issue = 97.00% * $390000 Proceed from Issue = $378300

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