Wright Industries Needs to Raise Capital for a Factory Expansion

question 174

Essay

Wright Industries needs to raise capital for a factory expansion.The board of directors has just concluded negotiations with an underwriter to issue $2,500,000 of 8%,15-year callable bonds dated June 30,2017,with interest payment dates of December 31 and June 30.The bonds are issued on June 30,2017,at 102.5.Wright's year end is December 31 and straight-line amortization is to be used.
a_Prepare the necessary journal entries to record the issuance of the bonds on June 30,2017,and the first interest payment on December 31,2017.
b_Show how the bonds will be presented on the December 31,2017,balance sheet of Wright Industries.

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Definitions:

Private Consumptions

Expenditure by households and individuals on goods and services for personal use, excluding purchases by businesses or government.

Pareto Optimal

A resource distribution paradigm where it's unattainable to ameliorate the situation of one individual without diminishing that of another.

Utility Functions

Representations of an individual's preference ordering over a set of goods or outcomes, quantifying the satisfaction obtained from each.

Private Goods Consumption

The act of consuming goods that are excludable and rivalrous in nature, implying that one individual's consumption of the good prevents others from consuming the same unit of the good.