Analyzing and Reporting Financial Statement Effects of Bond Transactions
Lundholm, Inc., reports financial statements each December 31 and issues $400,000, 9%, 15-year bonds dated May 1, 2012, with interest payments on October 31 and April 30. Assuming the bonds are sold at par on May 1, 2012, complete the financial statement effects template to reflect the following events: (a) bond issuance, (b) the first semiannual interest payment, and (c) retirement of $200,000 of the bonds at 101 on November 1, 2012.
Use negative signs with your answers, when appropriate.
| Balance Sheet | ||||||||||
| Transaction | Cash Asset | + | Noncash
Assets |
= | Liabilities | + | Contributed
Capital |
+ | Earned
Capital |
|
| (a) | Answer 400000
|
Answer 0
|
Answer 4000000
|
Answer 0
|
Answer 0
|
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| (b) | Answer -18000
|
Answer 0
|
Answer 0
|
Answer 0
|
Answer -18000
|
|||||
| (c) | Answer -20200
|
Answer 0
|
Answer -200000
|
Answer 0
|
Answer -2000
|
|||||
| Income Statement | |||||
Revenue |
– |
Expenses |
= |
Net
Income |
|
| Answer 0
|
Answer 0
|
Answer 0
|
|||
| Answer 0
|
Answer 18000
|
Answer -18000
|
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| Answer
|
Answer 2000
|
Answer -2000
|
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