On January 1,2016,a Company Issues 3-Year Bonds with a Face

question 177

Essay

On January 1,2016,a company issues 3-year bonds with a face value of $200,000 and a stated interest rate of 8%.Because the market interest rate is higher than the stated interest rate,the company receives $194,000 for the bond.
Required:
Part a.Determine the amount of the discount that will be amortized during the year ending December 31,2016.
Part b.Prepare the journal entry to record the first interest payment on December 31,2016.

Analyze the relationship between sales growth, capacity utilization, dividend policy, and the need for additional financing.

Calculate the pro forma financial figures given a set growth rate and specific financial ratios.

Understand the dynamics of cost, asset, and liability management in response to sales changes.

Analyze the effect of dividend payout policies on retained earnings and need for external financing.

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Definitions:

Profits and Losses

A financial statement that shows the revenue, costs, and expenses over a certain period, determining the company's net income or loss.

Admitted

In insurance, relates to insurers that are officially authorized to do business in a particular state.

Partnership Dissolved

The formal termination of a partnership agreement, resulting in the cessation of business activities and the distribution of assets and liabilities among the partners according to their agreement.

Ownership Structure

The way in which the ownership of a company is organized, including the types and proportions of shareholding and control mechanisms.