On November 1, 2020, Robert L. Carroll Paleontology Museum Inc. issued $150 million in 13% bonds, with
Question:
On November 1, 2020, Robert L. Carroll Paleontology Museum Inc. issued $150 million in 13% bonds, with interest payable on April 30 and October 31 each year. The bonds were issued at a price of 106.97 and had a maturity date of April 30, 2040. The interest expense for the first payment on April 30 is $9,675,437. The company’s fiscal year end is October 31.
Required
a. Calculate the cash proceeds from the issuance of these bonds and the yield on the bonds.
b. Prepare the journal entry made by the company on issuance.
c. Provide the journal entry to record the first interest payment. Ignore year-end accruals of interest.
d. Determine the carrying amount these bonds would be reported at on the company’s statement of financial position at October 31, 2021.
MaturityMaturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
Step by Step Answer:
Understanding Financial Accounting
ISBN: 9781119406921
2nd Canadian Edition
Authors: Christopher D. Burnley