Question

PB10-4 (Algo) Comparing Bonds Issued at Par, Discount, and Premium [LO 10-3]

Answer 1

The amounts that would be reported on January 1, 2021, financial statements of Marshalls Corporation after the issuance of the bonds under these three independent cases are as follows:

Financial statements                  Case A             Case B             Case C

                                          (Issued at 100)   (Issued at 96)    (Issued at 104)

a. Bonds Payable                   $540,000         $540,000          $540,000

b. Unamortized Premium      

   (or discount)                      $0                         $21,600              $21,600

c. Carrying Value                 $540,000            $518,400           $561,600

Data and Calculations:

Face value of bonds payable = $540,000

Bond interest = 7%

Bonds issued at par (at 100):

Face value of bonds payable = $540,000

Cash proceeds = $540,000

Unamortized premium (or discount) = $0 ($540,000 - $540,000)

Bonds issued at discount (at 96):

Face value of bonds payable = $540,000

Cash proceeds = $518,400 ($540,000 x 96%)

Unamortized discount = $21,600 ($540,000 - $518,400)

Bonds issued at premium (at 104):

Face value of bonds payable = $540,000

Cash proceeds = $561,600 ($540,000 x 104%)

Unamortized premium = $0 ($561,600 - $540,000)

Question Completion:

Marshalls Corporation completed a $540,000, 7 percent bond issue on January 1, 2021. The bonds pay interest each December 31 and mature 10 years from January 1, 2018.

Required: For each of the three independent cases that follow, provide the following amounts to be reported on January 1, 2018, financial statements immediately after the bonds were issued: (Deductions should be indicated by a minus sign.) January 1, 2018—Financial statements Case A (Issued at 100) $ 650,000 Case B (at 96) 650,000 Case C (at 104) 650,000 $ $ a. Bonds Payable b. Unamortized premium (or discount) c. Carrying Value

Learn more about bonds payable at brainly.com/question/25524725