ABC Corp issued a bond for $88,200 at par. The bond will mature in 10 years when
Question:
ABC Corp issued a bond for $88,200 at par. The bond will mature in 10 years when the principal will be paid, additionally every six months coupon interest will be paid. The issue date was planned for July 1st when the market interest rate was at 6%. However the bonds are actually sold on September 1st when the market interest rate was 5%. ABC Corp. prepares its annual financial statements on October 31st.
Required 1: What is the amount of cash received by ABC Corp. on September 1st?
Required 2: What is the amount of interest payable recognized in the books as of October 31st of year 1?
Required 3: What is the amount of loan payable cancelled in year 10?
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta