Assume that after ten years market interest rates have

Assignment Help Accounting Basics
Reference no: EM13613490

Golden Corporation has $20,000,000 of 10.5%, 20 year bonds dated June 1, 2010, with interest payment dates of May 31 and November 30. After 10 years the bonds are callable at 104, and each $1,000 bond is convertible into 25 shares of $20 par value common stock. The company's fiscal year ends on December 31. It uses the straight-line method to amortize bond premiums or discounts.

Required:

1. Assume the bonds are issued at 103 on June 1,2010.

a. How much cash is received?

b. How much is bonds payable?

c. What is the difference between a. and b. called and how much is it? d. With regard to the bond interest payment on November 30, 2010:

(1) How much cash is paid in interest?

(2) How much is the amortization?

(3) How much is the interest expense?

2. Assume the bonds are issued at 97 on June 1, 2010.

a. How much cash is received?

b. How much is bonds payable?

c. What is the difference between a. and b. called and how much is it?

d. With regard to the bond interest payment on November 30, 2010: (1) How much cash is paid in interest?

(2) How much is the amortization?(3) How much is the interest expense?

3. Assume the issue price in requirement 1. and that the bonds are called and retired ten years later.

a. How much cash will have to be paid to retire the bonds?

b. Is there a gain or loss on the retirement, and if so, how much is it?

4. Assume the issue price in requirement2. and that the bonds are converted to common stock ten years later.

a. Is there a gain or loss on the conversion, and if so, how much is it?

b. How many shares of common stock are issued in exchange for the bonds?

c. In dollar amounts, how does this transaction affect the total liabilities and the total stockholder's equity of the company? In your answer, show the effects on the four accounts.

5.Assume that after ten years, market interest rates have dropped significantly and that the price of the company's common stock has risen significantly. Also assume that management wants to improve its credit rating by reducing its debt to equity ratio and that it needs what cash it has for expansion. Which approach would management prefer- the approach and result in requirement 3. or 4.? Explain your answer. What would be a disadvantage of the approach you choose?

Reference no: EM13613490

Previous Q& A

  Convert the following sat scores into a new distribution

convert the following sat scores into a new distribution with a mean of 50 and a standard deviation of 2.what new score

  Conduct a simple linear regression analysis of these data

a. conduct a simple linear regression analysis of these data in which the average tuition for private colleges is

  A gasoline engine absorbs 8320 j of heat at 289c and expels

a gasoline engine absorbs 8320 j of heat at 289c and expels 7820 j at a temperature of 89c. find the change in entropy

  If the frictional force experienced by the block is 8 n the

consider the following situation. a block of mass 20 kg is initially at rest on an inclined that makes an angle of 37

  What tensile yeild strength is required to provide a safety

the surface of a steel machine member is subjected to the stresses of sigma1100 mpa sigma220 mpa sigma3-80 mpa. what

  Students in a fraternity house want to be able to spray

students in a fraternity house want to be able to spray water 25 m across their neighbors yard onto a patio. they have

  Construct the anova table for these data test the null

sixteen determinations of the ratio of iodine to silver in four different silver preparations were made with the

  Which of the following journal entries correctly records

which of the following journal entries correctly records the current months activity where 250000 of raw material was

  A car drives over the top of a hill that has a radius of

a car drives over the top of a hill that has a radius of curvature of 100 ft. if the normal component of acceleration

  A rocket of mass 45 x 105 kg is in flight its thrust is

a rocket of mass 4.5 x 105 kg is in flight. its thrust is directed at an angle of 53.0deg above the horizontal and has

Reviews

Write a Review

 

Similar Q& A

  Prepare journal entries for factoring accounts receivable

Prepare all journal entries to record the preceding information. How the accounts related to BBB's factoring and assignment agreements be reported on BBB's year end financial statements

  Compute its contribution margin and contribution margin

the following costs result from the production and sale of 4000 drum sets manufactured by vince drum company for the

  Overhead costs at year-end

Should any of the overhead costs at year-end be added to Job W? If so, how much? Explain.

  Prepare a schedule of cash collections

Prepare a schedule of cash collections for January, February, and March and for the quarter in total, Prepare a production budget for January, February, and March and for the quarter in total.

  Alocal pbs station has decided to produce a tv series on

a local pbs station has decided to produce a tv series on state-of-the-art manufacturing. the director of the tv series

  Compute the companys activity variances for june input all

harolds roof repair has provided the following data concerning its costsfixed cost per monthcost per

  Miss nazia is the owner of a business entity with a capital

miss. nazia is the owner of a business entity with a capital of rs. 10 million. she has introduced her own brand of

  An investment of 10000 has an investmentinflow ratio of 62

a an investment of 10000 has an investmentinflow ratio of 6.2 and a useful life of 12 years. what are the annual cash

  At the beginning of the year orbit airways purchased a used

at the beginning of the year orbit airways purchased a used boeing aircraft at a cost of 45 million. orbit expects the

  Calculate the average annual dividend per share for each

partridge theatre inc. owns and operates movie theaters throughout texas and oklahoma. partridge theatre inc. has

  Net credit sales for the month are 800000 the accounts

net credit sales for the month are 800000. the accounts receivable balance is 160000. the allowance is calculated as

  At the end of 2014 sanchez company has accounts receivable

at the end of 2014 sanchez company has accounts receivable of 400000 and an allowance for doubtful accounts of 20000.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd