On January 1, 2014, Nicks Corporation issued $250 million of floating-rate debt. The debt carries a contractual
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Required:
1. Prepare a journal entry to record the issuance of the bonds on January 1, 2014, at par.
What was the effective (or market) interest rate when the bonds were issued?
2. Prepare a journal entry to record interest expense for 2014, 2015, and 2016. Assume that interest is paid annually on December 31.
3. What is the market value of the debt at December 31, 2016, assuming Nicks Corporation’s credit risk has not changed.
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
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