Question

E-Tech Initiatives Limited plans to issue $730,000, 10-year, 6.50 percent bonds. Interest is payable annually on December 31. All of the bonds will be issued on January 1, 2019. Show how the bonds would be reported on the January 2, 2019, balance sheet if they are issued at 105.

E-TECH INITIATIVES LIMITED
Balance Sheet (partial)
As of January 2, 2019
Carrying Value	$0

Answer 1

E-TECH INITIATIVES LIMITED
Balance Sheet (partial)
As of January 2, 2019
Liabilities
Long Term Liabilities:
Bonds Payable [Face Value]	$          730,000
Add: Premium on Bonds Payable [730000 x 5%]	$            36,500
Carrying Value [730000 x 105/100]	$          766,500