Sikes Corporation, whose annual accounting period ends on December 31, issued th

Question

Sikes Corporation, whose annual accounting period ends on December 31, issued the following bonds: Date of bonds: January 1, 2015 Maturity amount and date: $110,000 due in 10 years (December 31, 2024) Interest: 10 percent per year payable each December 31 Date issued: January 1, 2015 Required: 1. 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 are issued. TIP: See Exhibit 10.5 for an illustration distinguishing Bonds Payable from their carrying value. (Negative amounts should be indicated with a minus sign.) Case A (issued at 100) Case B (at 97) Case C (at 101) January 1, 2015-Financial statements: a. Bonds payable b. Unamortized premium (or discount) c. Carrying value

Explanation / Answer

Question a Bonds payable 110,000 110,000 110,000 b=c-a b Premium/(discount) 0 -3,300 1,100 c Issue price 110,000 106,700 111,100 [110000*100%] [110000*97%] [110000*101%]

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