7. value: 2.22 points CPIO-4 Comparing Bonds Issued at Par, Discount, and Premiu

Question

7. value: 2.22 points CPIO-4 Comparing Bonds Issued at Par, Discount, and Premium [LO 10-3 Sikes Corporation, whose annual accounting period ends on December 31, issued the following bonds: Date of bonds: January 1, 2015 Maturity amount and date: $170,000 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.) January 1, 2015-Financial statements: (issued at 100 (at 97) Case A Case B Case C (at 101) a. Bonds payable b. Unamortized premium (or discount) Carrying value

Explanation / Answer

Calculate carrying value :

January 1,2015-Financial statements: Case A (issued at 100) Case B (at 97) Case C (at 101) a Bonds payable 170000 170000 170000 b Unamortized premium (or discount) 0 (5100) 1700 c Carrying value 170000 164900 171700

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