~~ Spring, 2024 ~~

~ Chapter 13 Example ~

1. Determine price of bond (Mkt%) on Authorized date
	a) $5,000,000 face, 10%, 5yr; Mkt=8%
	b) $5,000,000 face, 3%, 5yr; Mkt=8%
	c) $5,000,000 face, 8%, 5yr; Mkt=8%
2. Determine price of bond (Face%)
	Angels Co issues a $6,000,000, 5%, 15-year bond on 3/1/24 (authorized date 3/1/24). Determine the total "Cost of Borrowing", and prepare the entries for the issuance and payment of the first interest payment assuming that the bond is issued at the following: a) @ 100 b) @ 95½ c) @ 106
3. Issue between interest dates (Face%)
	Bluejays Co issues a $20,000,000, 6%, 8-year bond on 5/1/24 (authorize date 4/1/24) for $18,860,000 plus accrued interest. Prepare the entries for the issuance, interest payments, and year-end adjustment for 2024 and 2025. Determine the carrying value of the bond at 12/31/24 and 25.
4. Early retirement (Face%)
	Redsox Co issues 12,000 of its $1,000, 4%, 10-year bonds on 8/1/16 (authorize date 8/1/16) @ 105. The entire debt is settled on 4/1/24 @ 103. Prepare the entries for the issuance, first interest payment, and retirement of the bonds. Determine the amount of interest expense FYE 12/31/16, 23, and 24.
5. Issue between interest dates (Mkt%)
	Mariners Co issues a $4,000,000, 9%, 20-year bond on 4/1/24 (authorize date 6/1/23) when the market rate of interest is 6%. Prepare the entries for the issuance, first two interest payments, and 12/31/24 year-end adjustment. Determine the carrying amount of the bond at 12/31/24 and 25. Determine the amount of interest expense FYE 12/31/25.
6. Note payable - equal principal and interest payment (net method)
	Twins Co purchased a piece of equipment on 12/31/23 by giving a $1,485,000, 2%, 5-year note. Equal annual payments are to be made beginning on 12/31/24. At the time of issuance, Twins Co's normal borrowing rate is 10%. Prepare the entries at 12/31/23, 24, 28. Determine the amount of the liability considered current/long-term at 12/31/25, 26, 27.
7. Zero-interest note (gross method)
	Whitesox Co purchased a piece of equipment on 6/1/24 by giving a 4-year, $255,000, zero-interest note. At the time of issuance, Twins Co' normal borrowing rate is 10%. Prepare the entries for the issuance, 12/31 year-end adjustments, and repayment of the note. Determine the amount of the liability considered current/long-term at 12/31 of each year until the note matures.