ForeEver Yours Inc a manufacturer of wedding rings issued two
ForeEver Yours, Inc., a manufacturer of wedding rings, issued two financial instruments at the beginning of 2014: a $10 million, 40-year bond that pays interest at the rate of 11% annually and 10,000 shares of $100 preferred stock that pays a dividend of 7.5% annually. The preferred stock has a mandatory redemption feature that requires the company to repurchase all outstanding shares at par ($100 per share) in 40 years.

Describe how each financial instrument will affect the company’s balance sheet and income statement in 2014.

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