Question

1. On January 1, 2016 Nick issued a $100,000 bond that matures in 20 years and...

1. On January 1, 2016 Nick issued a $100,000 bond that matures in 20 years and pays 4% interest (stated or coupon rate) a year. (Payment date is December 31.) The market (yield) rate is 6%.

$ _______________________

           

2. Record the entry Nick has to make on January 2 when he issues the Bonds Payable.

Date

Accounts

Debit(s)

Credit(s)

12/31/16

For the rest of this quiz, assume the bond was sold @ 95.

3. Complete the first two years of the following table:

                                                                                                                                 

Year

Interest Expense

Book

1/1/16

1

2

4. Complete the entries at the end of the year for the first two years. Please use the table above.

Date

Accounts

Debit(s)

Credit(s)

12/31/16

Date

Accounts

Debit(s)

Credit(s)

12/31/17

1. On January 1, 2016 Nick issued a $100,000 bond that matures in 20 years and pays 8% interest (stated or coupon rate) a year. (Payment date is December 31.) The market (yield) rate is 6%.

$ _______________________

           

2. Record the entry Nick has to make on January 2 when he issues the Bonds Payable.

Date

Accounts

Debit(s)

Credit(s)

12/31/16

For the rest of this quiz, assume the bond was sold @ 104.

3. Complete the first two years of the following table:

                                                                                                                                 

Year

Interest Expense

Book

1/1/16

1

2

4. Complete the entries at the end of the year for the first two years. Please use the table above.

Date

Accounts

Debit(s)

Credit(s)

12/31/16

Date

Accounts

Debit(s)

Credit(s)

12/31/17
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