Question

Prepare a partial classified balance sheet. Only Liability and Equity sections are needed. Show all work.

The company could issue $2,500,000 of long-term bonds, due in 7 years with a stated rate of interest, paid semiannually, of 6%. The market rate for similar debt is 4%.
	Cash Received				Annual Cash Required
		$2,802,950			$150,000
	Face amount			$         2,500,000
	Face rate			6%
	Interest Payment periods			14
	Interest Payment			$               75,000
	Term			7 years
	Periods			14
	Market rate			4%
	PV factors used		single sum	0.758
			annuity	12.106
	PV face			$         1,895,000
	PV interest			$             907,950

Answer 1

Partial Classified Balance Sheet is as shown below:

XYZ Co.
Classified Balance Sheet (Partial)
As at XXXX
Particulars	Amount ($)	Amount ($)
LIABILITIES AND STOCKHOLDERS EQUITY
Liabilities :
Notes payable
Bonds Payable	2,500,000
Add: Premium on Bonds Payable	302,950	2,802,950
Total Stockholders' Equity
Common Stock
Additional paid in capital
Retained earnings
Total Stockholders' Equity		0
Total Liabilities and stockholders’ equity		2,802,950