Question

Pulte Homes, Inc., specializes in offering communities and home styles for buyers at every point on the home ownership spectrum, from first homes to urban development’s to lifestyle communities for active adults. William Pulte, the founder of Pulte Homes, Inc., built his first home in 1950, and the corporation built its first subdivision in 1961 in Detroit. Since then, the company has built more than 500,000 homes. After a merger with Centex in late 2009, Pulte Homes is now the largest U. S. homebuilder. The growth that Pulte Homes, Inc., has undergone since its start in 1950 requires a large cash flow. One way for a corporation to obtain cash is by issuing bonds. Why might a corporation issue bonds instead of issuing stock? Where would bonds payable be recorded on Pulte Homes’ financial statements? If a bond is issued at a premium, is the market rate higher or lower than the contract rate? What about a bond issued at a discount? How is bond premium recorded on the financial statements? What about bond discount?



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  • CreatedOctober 21, 2014
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