Sprint Is Planning to Issue Debentures with a Face Value

question 47

Essay

Sprint is planning to issue debentures with a face value of $10,000,000 on September 1,2010.The debentures mature in 10 years and have a face interest rate of 8 percent that is paid semiannually on March 1 and September 1 of each year.Sprint thinks the market interest rate will be 6%.Assume that Sprint has a fiscal year end on Aug 31.
Required:
(A.)Calculate the proceeds of the bond and set up an amortization schedule for the first year of the bond's life.
(B.)Where will the proceeds of the bond be reported on the budgeted financial statements.
(C.)What is the amount of interest expense Sprint will incur in the first year of the bond's life and where will the interest be reported on the budgeted financial statements for August 31,2011.
(D.)How will the bond be reported on the budgeted balance sheet on August 31,2011.

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Definitions:

Work Motivation

The internal and external forces that influence an individual’s willingness to perform and engage in their job tasks.

Reward Dissatisfaction

A state of discontent experienced by employees due to perceived unfair compensation, benefits, or recognition in comparison to their efforts or performance.

Unionized Firm

A company where the workforce is organized into a union, which negotiates with the employer on matters such as wages, hours, and working conditions.

Desired Behaviour

The specific actions or reactions expected from employees that are aligned with organizational goals and values.