发行债券的三种方式.ppt

Chapter 9 Bonds and Long-Term Notes
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Bonds
Medium-and large-sized company often choose to borrow cash by iss the interest payment.
On Dec. 31, 2013, bonds were mature:
Issuer:
Dr. Interest expense 42,000
Cr. Cash 42,000
Dr. Bonds payable 700,000
Cr. Cash 700,000
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Recording bonds issuance
Bonds issued at a discount
The issuing price?
Price=PV of interest + PV of face amount

Illustration 9-2 P375
PV of interest:
Interest payment =$700,000×12%×(6/12)=$42,000
n=2×3=6 semiannual periods
i=14%×(6/12)=7%
PV of interest=$42,000×=$200,195
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Recording bonds issuance
Illustration 9-2 P375

PV of face amount:
Face amount=$700,000
n=2×3=6 semiannual periods
i=14%×(6/12)=7%
PV=$700,000×=$466,438

Price=$200,195+$466,438=$666,633
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Recording bonds issuance
Illustration 9-2 P375
On Jan. 1, 2011, issued the bonds:
Issuer:
Dr. Cash 666,633
Discount on bonds payable 33,367
Cr. Bonds payable 700,000
The difference between the effective interest and the interest paid increases the existing liability
Effective interest=market rate×outstanding balance
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Recording bonds issuance
Illustration 9-2 P375
On June 30, 2011, paid the interest:
Interest expense
=$666,633×14%×(6/12)=$46,664
Interest actually paid=Face amount × Stated rate
=$700,000×12%×(6/12)=$42,000
Dr. Interest expense 46,664
Cr. Cash 42,000
Discount on bonds payable 4,664
On Dec. 31, 2011the outstanding balance
=$666,633+$4,664=671297
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Recording bonds issuance
Illustration 9-2 P375
On Dec. 31, 2011, paid the interest:
Inter