Accounting 2113 Quiz Chapter 10 A bond with a face value of s10,000 is issued at

Question

Accounting 2113 Quiz Chapter 10 A bond with a face value of s10,000 is issued at a discount of $800 on January 1, 2014. The face rate of interest on the bond is 7%. 5. REQUIRED as the market rate at the time of issuance greater than 7% or less than 7% b. if a balance sheet is presented on January 1, 2014, how will the bonds appear on the balance sheet? if a balance sheet is presented on December 31, 2014, will the amount for the bonds be higher or lower than on January 1, 20147 ANSWER: 2. 3. 6. Improv Corporation decides to redeem its $100,000 face value bonds when the carmying value is $107,019.48. The bonds are redeemed on December 31, 2015, at 102 REQUIRED: a. Cakculate Improv Corporation's gain or loss on the early redemption of the bonds b. Identify the accounting equation effects to be recorded at the time of bond redemption. ANSWER: a.

Explanation / Answer

Q5 a) Market rate is higher than 7% as bond is selling on discount. b) Bond will appear at book value of $ 10,000 and carrying value of $9,200. c) Carrying value will be higher than $9,200 due to charging of discount to P&L. Please raise another question for remaining part as per chegg policy.

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