Analyzing and Reporting Financial Statement Effects of Bond Transactions

Analyzing and Reporting Financial Statement Effects of Bond TransactionsLundholm, Inc., reports financial statements each December 31 and

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

 

 
(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

 

Answer

 

  Answer 2000

 

  Answer -2000

 

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