value: 2.14 points PA10-4 Comparing Bonds Issued at Par, Discount, and Premium [

Question

value: 2.14 points PA10-4 Comparing Bonds Issued at Par, Discount, and Premium [LO 10-3] Net Work Corporation, whose annual accounting period ends on December 31, issued the following bonds: Date of bonds: January 1, 2015 Maturity amount and date: $300,000 due in 10 years (December 31, 2024) Interest: 9.5 percent per year payable each December 31 Date issued: January 1, 2015 Required For each of the three independent cases that follow, provide the following amounts to be reported on the January 1,2015, financial statements immediately after the bonds were issued: (Amounts to be deducted should be indicated by a minus sign.) January 1, 2015-Financial Statements: (issued at 100) a. Bonds payable b. Unamortized premium (or discount) c. Carrying value Case A Case C (at 104) ase B (at 96)

Explanation / Answer

Note :

$300,000 * 4 % = ($12,000)

[Discount]

$300,000 * 4 % = $12,000

[Premium]

Jan1 , 2015 - Financial Statements Case A ( issued @ 100) Case B ( issued @ 96) Case A ( issued @ 104) a Bonds payable $300,000. $300,000. $300,000. b Unamortized premium (or discount) $0

$300,000 * 4 % = ($12,000)

[Discount]

$300,000 * 4 % = $12,000

[Premium]

c Carrying value $300,000. ($300,000. - $12,000) = $288,000 ($300,000. +$12,000) = $312,000

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