Bonds Cont.

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Bonds Cont.


Lecture number:
29
Pages:
2
Type:
Lecture Note
School:
Miami University, Oxford
Course:
Acc 221 - Intro to Financial Accounting
Edition:
1
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Lecture 29 Outline of Previous Lecture  Section 28: Chapter 7 & 8 Review  Chapter 7 o Value & Depreciation  Chapter 8 o Removing Assets o Goodwill o Payroll o Sales Tax Outline of Current Lecture  Section 29: Bonds Cont.  Bond Liability Face Value o Discount Bonds o Premium Bonds o Par Bonds o Maturity Payments o Semiannual Interest Current Lecture  Section 29: Bonds Cont.  Bond Liability  face value o Discount bonds  Sold $290,000, 6% annual rate, less than face value  Amortization schedule  Face value (interest rate) = $17,400  Payment promised in bond agreement = $15,000 o Actual – promised = $2,400 o Add difference to bond liability  Pay $15,000 now, save extra $2,400 for last payment  Record payment  Dr. interest expense $17,400  Cr. Cash $15,000  Cr Bond payable $2,400  End of terms, liability = face value o Premium Bond  Bond liability $310,000; above face value, 4% annual interest rate  $310,000 (4%) = $12,400 ACC 221 1st Edition



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