P12-4 f,g,h

er D - cond case payment a l entry required Perth income teme after acquiring the Cola's ability Prethany mind to record the What the end of the capital se on Coca-Cola was d i t ratio immediately to the par pact of these agreement on Coca fevalue. 896 coupon, love love Yield 1 crest stays at on . The d SOLO celue, 8c interessemiannually and were . Assume that the market rate of inter P12-4 Or Car The hands ing prices ads to sell at a discount. Rewind Explain what factors would cause the bonds to sell at a dis Interest Expense Coupon Payment Amortu be entry that O'Brien made to record the sale of the bom Design an Excel spreadsheet to complete the following schedule Beginning Balance To From 1/1/01 6/30/01 7/1/01 12/31/01 6/30/02 771/02 12/31/02 1/1/03 7/1/03 12/31/03 1/1/04 6/30/04 7/1/04 12/31/04 1/1/05 12/31/05 1/1/02 6/30/03 6/30/05 7/1/05 1/1/06 7/1/06 1/1/07 7/1/07 1/1/08 7/1/08 1/1/09 6/30/06 12/31/06 6/30/07 12/31/07 6/30/08 12/31/08 6/30/09 12/31/09 7/1/09 1/1/10 7/1/10 6/30/10 12/31/10 d. Prepare the entry to record the first interest payment on June 30, 2001, e. Show how the bonds would be presented on O'Brien's balance sheet at Dec 2001. balance sheet at December 31, CHAPTER 12 F LONG-TERM LIABILITIES 213 f. What is g. What shoul What is the economic value of the bonds on December 31, 20012 What should the liability value and the economic value of the bonds be on January 1, 2011, the maturity date of the bonds? Explain. Prepare the entry to record the retirement of the bonds on January 1, 2011. h. 012-5 Refer to P12-4. Assume that on June 30, 2009, market interest rates soared to 12%. Required: a. Compute the economic value of the bonds on June 30, 2009. b. Comment on any accounting adjustments required by O'Brien Corporation because of the change in market interest rates. c. What entry would be made by O'Brien if it retired the bonds on June 30, 2009,by purchasing the bonds in the open market? d. Explain why the action taken in part (c) may not be in the best interests of O'Brien's stockholders. Piz-6 The following is the discount amortization schedule for a $1,000 face, 6% semia coupon bond, issued when the market interest rate was 10% (compounded semiannu ally). The bond was issued on January 1, 2001, and matures on December 31, 2005 Beginning Interest Balance Expense $922.78 1 $ 46.14 Coupon Discount Ending Payment Amortization Balance $ 40.00 $ 6.14 $ 928.92 40.00 6.45 935.36 To Trom