Haulem Equipment Inc. issued $75 million 20-year bonds to finance the expansion of its school bus manufacturing

Question:

Haulem Equipment Inc. issued $75 million 20-year bonds to finance the expansion of its school bus manufacturing operations in Winnipeg, Manitoba. The bonds pay 6% interest semi-annually and were issued at 89.322 to yield 7%.

Required:

a. Calculate the amount of cash Haulem received on issuance of the bonds and prepare the related journal entry.

b. Prepare the journal entries to record the first two interest payments.

c. Calculate the carrying value of the bonds one year after issuance (that is, after the second semi-annual payment).

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Understanding Financial Accounting

ISBN: 978-1118849385

1st Canadian Edition

Authors: Christopher Burnley, Robert Hoskin, Maureen Fizzell, Donald

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Question Posted: Jun 12, 2015 12:34 AM

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Haulem Equipment Inc. issued $75 million 20-year bonds to finance the expansion of its school bus manufacturing

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a Cash received on issuance of bonds at 89322 or 89322 of face value 75000000 x 089322 66991500 ...View the full answer

Understanding Financial Accounting

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