Sikes Corporation whose annual accounting period ends on Dec

Sikes Corporation, whose annual accounting period ends on December 31, issued the following bonds Date of bonds: January 1, 2015 Maturity amount and date: $180.000 due in 10 years (December 31, 2024) Interest 10 peroent 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. T?P: See EtittiOS for an ilustration distinguishing Bonds Payable from their carrying value (Negative amounts should be indicated with a minus sign. Case A Case B fat 96) Case C (at 102) January ,2015-Financial statements a Bonds payable issued at 100) Reterences eBook & Resources Workshoet

Solution

January 1, 2015-Financial Statements Case A Case B Case C (Issued at 100) (Issued at 96) (Issued at 102) a. Bonds Payable $ 1,80,000 $ 1,80,000 $ 1,80,000 b. Unamortized Premium (or Discount) 0 $ -7,200 $ 3,600 c. Carrying Value $ 1,80,000 $ 1,72,800 $ 1,83,600 Working: Case A Issued Proceeds $ 1,80,000 x 100% = $ 1,80,000 Bonds Payable $ 1,80,000 Unamortised premium (Or discount) 0 Case B: Issued Proceeds $ 1,80,000 x 96% = $ 1,72,800 Bonds Payable $ 1,80,000 Unamortised premium (Or discount) $ -7,200 Case C: Issued Proceeds $ 1,80,000 x 102% = $ 1,83,600 Bonds Payable $ 1,80,000 Unamortised premium (Or discount) $ 3,600