Question

Alexi Co. issued $3.00 million face amount of 6%, 10-year bonds on June 1, 2019. The...


Alexi Co. issued $3.00 million face amount of 6%, 10-year bonds on June 1, 2019. The bonds pay interest on an annual basis on May 31 each year.

b-1. Independent of your answer to part a, assume that the proceeds were $2,634,000. Use the horizontal model to show the effect of issuing the bonds. Indicate the financial statement effect. (Enter your answers in whole dollars, not in millions. Enter decreases with a minus sign to indicate a negative financial statement effect.)

Balance Sheet Income Statement
Assets = Liabilities + Stockholders’ Equity Net Income = Revenues Expenses
= + =
= + =

Homework Answers

Answer #1

b-1. Independent of your answer to part a, assume that the proceeds were $2,634,000. Use the horizontal model to show the effect of issuing the bonds. Indicate the financial statement effect. (Enter your answers in whole dollars, not in millions. Enter decreases with a minus sign to indicate a negative financial statement effect.)

Balance Sheet Income Statement
Assets = Liabilities + Stockholders’ Equity Net Income = Revenues Expenses
Cash 2634000 = Bonds payable 3000000 + =
= Discount on bonds payable -366000 + =
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