Sikes Corporation, whose annual accounting period ends on December 31, issued the following bonds: Date of bonds: January 1, 2018

Sikes Corporation, whose annual accounting period ends on December 31, issued the following bonds: Date of bonds: January 1, 2018 Maturity amount and date: $300,000 due in 10 years (December 31, 2027) Interest: 10 percent per year payable each December 31 Date issued: January 1, 2018 Required: For each of the three independent cases that follow, provide the amounts to be reported on the January 1, 2018, financial statements immediately after the bonds are issued. TIP: See Exhibit 10.5 for an illustration distinguishing Bonds Payable from their carrying value. (Deductions should be indicated by a minus sign.)

Answers

Case A (issued at 100)       Case B(at 97)      Case C(at 101)

$300,000                             $291,000               $303,000

The financial statements for Case A

Long term liabilities:

Bonds payable $300,000

The financial statements for Case B

Long term liabilities:

Bonds payable $300,000

Unamortized discount $9,000

The financial statements for Case C

Long term liabilities:

Bonds payable $300,000

Unamortized premium $3,000

Question in order:

See the first image attached

Answer and Explanation:

Reported amount as of 1, January 2018 after bonds were issued is as below

                                       CASE A             CASE B             CASE C

                                       Issued at 100    Issued at 95     issued at 103

a. Bonds Payable           $130,000          $130,000          $130,000

b. Discount Premium     $0                      $6,500              $3,900

                                                                  Discount            Premium

                                                                  130,000×(100    130,000×(100-

                                                                   -95)⁰/₀                103)⁰/₀

c. Carrying value             $130,000          $123,500           $133,900

payable bonds would be the maturity amount or face value of bonds. The bonds payable would remain same, that is, $130,000 in each case.

In case B, the discount is calculated because the bonds are issued at a price which is less than the face value

in case C, The premium is calculated when the bond are issued at a price that is more than the face value

Carrying value will be calculated by deducting the discount from the bond s payable or by adding the premium in the bonds payable                        


Sikes Corporation, whose annual accounting period ends on December 31, issued the following bonds: D

Cis te correct i think i c idk but i think it is c
Wite quickly without over thinking .

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